Share Purchase Agreement

A share purchase agreement is a judicial agreement between two parties: a seller and a buyer. They may be referred to as the dealer and purchaser in the contract. The agreement is proof that the sale and the terms of it were mutually accepted.

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Share Purchase Agreement

HOW DOES A SHARE PURCHASE AGREEMENT WORK FOR YOU?

Step 1

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 Our Lawyers will draft all your required document
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FORMAT OF SHARE PURCHASE AGREEMENT

Process Of share purchase agreement  

    • First of all, you need to format the document regarding the share purchase agreement as per the companies act 2013 process.
    • Insert an appropriate title for the share purchase agreement at the top note of the page.
    • At the beginning of the agreement, there should be a brief description of the purchaser’s and seller’s identification.
    • The agreement should include an accurate legal description of the property.

 

Price And Payment Of The Purchase. 

    • Mention the purchase price.
    • Get the earnest money deposited.
    • Finance description.
    • List all the sales items.
    • Also, list the items non – sale items. 
    • Check whether the sale was functioned by the buyer. 

 

 Closing Cost Description. 

    • Mention the closing costs, which the seller will pay.
    • Mention the closing cost, which the buyer will pay.
    • Mention who will be obliged to pay the taxes.

 

Inspection Process Description.  

    • Conduct proper investigation of the buyer to ensure any kind of inspection.
    • Mention whether the sale is contingent on an inquiry. 
    • In case the review is unacceptable, check various alternatives. 
    • Suggest that the buyer secures a survey.

 

Making Promises Regarding The Property

    • Prepare the seller’s representation.
    • Explain the conveyed deed.
    • Illustrate how the “risk of loss” passes.

 

 Agreement Finalizing

    • Add a conflict resolution cost.
    • Confirm acceptance and closing time.
    • Add the seller’s approval.
    • Get your draft agreement audited by an attorney.

BENEFITS COMES WITH THE SHARE PURCHASE AGREEMENT

Alertness In Business 

As an essential business practice, a share purchase agreement (SPA) takes place during the onboarding process. Although modern companies intend to work casually, the absence of such an agreement can drive to multiple unnecessary consequences that can be instantly avoided.

 Secures Involved People 

A share purchase agreement ensures the people concerned are allowed to secure their interests before transferring shares. As an all-inclusive agreement, it defends all perspectives of business dealings. It is necessary for parties connected to examine every provision included in the agreement and thereby understand its meaning.

some benefits of the share purchase agreement:

    • It supports in formalizing and achieving the sale of shares in an ordered and legal manner.
    • Since SPAs are accurate and include all areas involved in the transaction, there is little to no extent for confusion.
    • It serves in forming a legal structure to shield the benefits of sellers in case they are duped or cheated.
    • It helps authorities in holding track of such transactions and therefore supporting them.
    • It assists companies in keeping a record of shareholders and involves them in their decision-making process.

REQUIREMENTS OF SHARE PURCHASE AGREEMENT IN INDIA.

    • Although there are no legal requirements, reports are to be included because it locks down the immediate context of the agreement.
    • The agreement should contain detailed and complete details of the parties.
    • It should include the number of shares included in the transaction and any other information regarding the shares.
    • The purchase price of the shares should be fair to both parties.
    • The mode of payment of the purchase price should be mutually agreed.
    • The closing mechanism for city, date, time, and the duration in which the procedures are settled.
    • The buyer’s and seller’s warranties and representation.
    • Warranties are contractual statements issued by the seller to deliver the details that the buyer needs to be aware of concerning the shares and business involved.
    • Extra attention should be given to the information submitted, as any false or incorrect information may land all parties in court. 
    • Statement of severability and binding influence the agreement.

 

Who Needs A Share Purchase Agreement?

If any person is buying or selling shares in the company or industry to another business or person, they need to use a share purchase agreement. For example, if a business has two partners, they own equal rights and shares. And any partner is leaving the partnership, and the SPA can be used to buy their stocks in the business. When all of the claims are obtained, the purchase of a business agreement can be used instead.

 

SHARE PURCHASE AGREEMENT DRAFT

The share purchase agreement is the central document. Although the buyer is usually drafted, it is normal for the seller to provide the first draft on an auction sale. On an auction sale, the first draft is ordinarily prepared by the seller.

Information To Be Involved In The Share Purchase Agreement?

    • The buyer and seller of the shares.
    • The company is selling the shares.
    • The shares value.
    • The law administers the agreement.
    • The kind of shares that are sold.

 A Share Purchase Agreement Procedure

    • You can consult a qualified lawyer and explain the entire process and make them understand the need to share the purchase agreement with you.
    • Once the objection is clear, the attorney will draft the purchase agreement respectively.
    • The draft share purchase agreement will be given to you for your review.
    • The entire process demands around 3-4 working days to get completed. 

Information Does A Share Purchase Agreement Contain. 

A share purchase agreement as per companies act 2013 should contain information about

    • The company from where the shares are being transferred.
    • The buyer and the seller of the shares for the Share Purchase Agreement.
    • Under which law the agreement covers.
    • The shares kind which is being sold.
    • The number and price of the shares that are being sold. 
    • The deal contains payment information, including if the deposit is necessary.
    • The complete due payment and the closing date of the agreement.

The shares are defined in two types of classes. Voting and non- Voting is an important thing. Voting shares allow the shareholder to call an idea on the director’s choices and corporate policy. Non-voting shareholders are not entitled to vote on board of directors changes or corporate strategies.

 

Required Documents for a share purchase agreement

  • Share transfer form After fulfillment, the seller of the shares must hand it over to the buyer, i.e., a signed share transfer form setting out the shares being transferred and the consideration received.
  • Share certificate The company must cancel the seller’s existing share certificate and give new share certificates according to the new shareholdings.
  • Letter of resignation If the seller retires from the company, the seller must hand over the retirement letter before either completion.
  • Notification to ASIC Once a share sale has been effected, the organization must inform the ASIC (application-specific integrated circuit) in 28 days of the change. This can be done by Form 484, which is available on the ASIC website.

FAQs on Share Purchase Agreement

Share Purchase Agreement is the written agreement made when Shares are transferred from a shareholder to the other person. It can be existing or new shareholders. Shares are allotted by way of gift or sale. Typically, to start a new shareholder share are transferred.

Company Name. Purchaser’s name.

  1. Face value of the share ( par value) 
  2. The total number of shares sold.
  3. When and where the transaction takes place.
  4. Warranties and Representations offered by the seller and buyer.
  5. Possible employee problems, such as bonuses and rewards.

The Share Purchase agreement aims to easily transfer the ownership of shares in a company from a seller to a purchaser.

A Share Purchase Agreement in India is a principal business process that includes an investor in its actions. Though many organizations freely choose the path of easygoing strategy to deal with the before-mentioned issues, the deficiency of approval can put the future of business activities at risk.

A guarantee is a juridically binding proclamation of testimony given by the seller to the customer that a specific condition exists. They are vital in share buy agreements, as they allow jeopardies and risk between the vendor and purchaser.

  • Shareholder Agreement and Share Buying Agreement are the formal aspects that start and built up the link between 2 companies, so the company that is putting wild be engaged with the procedure.
  • Organizing the exchange will be established on the field of action between the two gatherings
  • The expectation of one meeting with the rise in the venture will be served to broaden.

A shareholder agreement, also known as a stockholders' agreement, is an agreement among a company's shareholders that explains how the company should be operated and plans shareholders' rights and responsibilities.

If there is no agreement in place, shareholders face the risk of losing important information and procedure when one of them transmits the company. Furthermore, the agreement also confirms the way returns are shared. This is essential when shareholders contribute differently to the company.

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