What is a share purchase agreement?

How does a share purchase agreement work?

A share purchase agreement (“SPA”) is typically entered into by and between a buyer and seller(s) of a target company’s shares whereby the seller(s) agrees to sell a specific number of shares to the buyer for a specified price. … In this article, assume a target company includes its subsidiaries.

What should I look for in a share purchase agreement?

The following items are listed in a stock purchase agreement:

  1. Name of company.
  2. Par value of shares.
  3. Name of purchaser.
  4. Warranties and representations made by the seller and purchaser.
  5. Possible employee issues such as benefits and bonuses.
  6. How many shares are being sold.
  7. Where and when the transaction takes place.

Is a share purchase agreement mandatory?

A Share Purchase Agreement is an essential business practice when a shareholder is being initiated. Absence of such a document can have several uninvited consequences. The document gives both parties a chance to protect their interests before transferring the shares.

What is a stock purchase agreement used for?

A stock purchase agreement is an agreement that two parties sign when shares of a company are being bought or sold. These agreements are often used by small corporations who sell stock. Either the company or shareholders in the organization can sell stock to buyers.

Who drafts a share purchase agreement?

The buyer’s lawyers will generally prepare the first draft of the share purchase agreement (SPA). However, in addition to precedents which assume that the drafter is acting for the buyer, we also provide precedents for drafters acting for the seller (either preparing a first draft or marking up the buyer’s draft).

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How do I participate in a share purchase plan?

Typically, an SPP is conducted at a discounted price to the current listed price of the stock to encourage shareholders to purchase more shares. In order to participate in the SPP, the person must have been a shareholder on the record date set by the company.

What is the difference between a shareholders agreement and share purchase agreement?

As share purchase agreements just lay down a lawful agreement between the parties about the transfer of shares, Shareholders agreement lays down the rights and other obligations of the parties. It defines the actual relationship of the parties in terms of rights generated by purchasing shares of the company.