It is common practice for the parties to the transaction to disclose, prior to the drafting of a share purchase agreement, all relevant elements related to the assets and liabilities of the target entity, known as due diligence. Either the buyer or the seller can design the share purchase contract. However, it is customary for the purchaser to develop the agreement in such a way that it meets the conditions they have proposed in their statement of intent. Buyers often first offer a share purchase with a letter of intent. The main difference between these types of purchases is that the seller retains ownership of a company with an asset purchase and loses ownership with a share purchase. However, normally there are two parties, if the shares are held by several people, it is generally necessary that each shareholder have a party to the agreement. Although occasionally, if there are multiple parties, lawyers will include their details in a separate timetable for the agreement. No, LawDepot`s share purchase agreement model does not include asset purchases. Apart from the question of why the shares are sold and possible prior sales efforts should be asked basic demands regarding the legal books and the organizational structure of the company. However, there are variations such as a management buy-back situation or in which a majority stake is purchased and not all of the share capital. In these situations, there are other important documents than the share purchase agreement. For example, a new shareholder pact will be important and there will be a reflection on control, dividends, exit and other key issues. It should be noted that the concept of “transfer” in the company`s statutes relates only to the transfer of legal property to the shares and not to the transfer of reasonable interest, unless the opposite is foreseen.
This can have a significant impact on restrictions on the transfer of shares. Where there are several sellers (z.B. if the shares of a private company are held by a certain number of parties), they generally enter into the agreement to sell the shares of the target company. Holders of a small number of shares, particularly those who are passive investors, will not want to provide detailed guarantees about the business. The target company itself and other subsidiaries it may own may, but are generally not contracting parties. Every transaction is different. Negotiation is an important aspect for which good experienced lawyers can assist in consultation. The final agreement is the final step in a process where discovery and due diligence are crucial. If more than one seller is present, a seller may try to limit liability to a certain extent. In some cases, non-dominant shareholders who have not been involved in the management of the company may successfully negotiate that their guarantees are limited to a good relationship with their shares.
As a general rule, no guarantee is expected from the company itself. The limitation of liability limits the amount that one party must pay to the other party if it suffers prejudice as a result of a breach of contract between the parties. It is customary for a seller to limit liability under the contract, particularly with respect to warranties, and this is generally accepted by the buyer. For more information, please see The Limitation of Responsibility. To learn more about the structure of a company`s shares, you can read the company`s founding articles or the stock listing in which the shares are auctioned.