Share Purchase Agreement Consideration Shares

When it comes to buying and selling businesses, one of the easiest ways to transfer ownership is by selling the company`s shares. This is because while the ownership of the business may change, the day-to-day operations of the business continue, with employees, contracts and ownership remaining in the business. Warranties address a wide range of compliance issues that a buyer would deem desirable or necessary. If the due diligence process or disclosure reveals a very serious matter, the buyer can simply accept it and „exit“ the company or negotiate some kind of compensation or some comfort. A share purchase agreement (SPA) is the main contract used in a private sale of shares. Cash This is perhaps the simplest form of counterparty, as it means assigning a cash value to the share capital to be acquired, much like for everyday transactions. Such consideration can provide certainty about the value of each share and may therefore be the preferred option. The buyer is not obliged to enter into the purchase of any of the shares, unless the purchase of all the shares is concluded at the same time in accordance with this agreement, but the conclusion of the purchase of certain shares does not affect the rights of the buyer with regard to the purchase of the others. The second step is to transfer the shares. At the end of the second stage, the buyer becomes the owner of the shares that were part of the sale activity.

This second stage is often referred to as a „colony“. If there are multiple sellers (for example.B. if the shares of a private company are held by a certain number of parties), as a general rule, each will enter into the agreement to sell the shares of the target company. Holders of a small number of shares, especially those who are passive investors, will not want to give detailed guarantees regarding the company. The target company itself and other subsidiaries it may own may, but will not generally be, parties to the agreement. The restrictions in clause 11.1 do not prevent guarantors from holding shares in shares or other securities of an undertaking traded on a securities market, unless such interest exceeds 3%. of the share capital issued by the company or class of securities concerned. As in Ireland, a restriction must be proportionate to a legitimate interest, in this case the protection of the good business or goodwill of the target company. Restrictions considered broader than necessary to protect this interest may not be valid under English customary law.

As a general rule, under UK competition law, a three-year non-competition clause would generally be acceptable if know-how or good business or goodwill has been acquired. This is explained in more detail in the section below, but the seller`s warranties are normally established in a separate schedule from the share sale contract. In some situations, it may be necessary to make the conclusion of the share purchase agreement subject to certain issues, such as. B obtaining tax decommitments or administrative authorisation, so that, in that case, normally suspensive conditions would be included in the contract. . . .