The share purchase agreement is a legal document that defines the conditions under which the shares are transferred to a company. It distinguishes between the sale of all shares of a company and a partial sale. There are at least two parties to this agreement: a sales company holding the title rights to the shares and a buying company. As a general rule, shares are transferred for cash. However, it is also possible to pay equity with shares, in-kind contributions or media. However, there are two ways to protect the seller. First, there is the disclosure letter. It is a letter containing supporting documents that the seller sends to the buyer and which lists the exceptions or qualifications of the guarantees contained in the sales contract. Second, there will often be a clause or schedule that will determine the seller`s potential liability in terms of value and time for any claim against him. When the shares of the company that run the business are acquired, it is normally the buyer`s lawyers who prepare the first documentation.
This is because there will be important guarantees and compensations in the documentation to protect the buyer, which makes it useful for his lawyer to prepare them. In this blog, we explain the difference between the options of sale and purchase. The right of pre-emption describes the obligation for a shareholder to first offer its share to one of the existing shareholders before selling it to a third party. This allows the existing shareholder to purchase on (financial) terms offered by the external buyer. When buying an installation, the buyer buys specific assets. Due diligence investigations are important in determining what assets are required to operate the business. The buyer may exclude unwanted assets and has a better opportunity to unintentionally avoid iron commitments related to the previous activity. current contracts related to the company, such as. B the lease or delivery contract, must be addressed individually to ensure that they can be transferred; If not, they must be renegotiated. There is no capital gains tax exemption for a company that sells its assets. Depending on the allocation of the purchase price, there may be a tax debt for the recapture that should be paid by the company that sells its assets.