What can you expect to find in a Share Sale and Purchase Agreement?
When arranging for the sale or purchase of shares, you can usually expect to see some of the following terms in your agreement:
- The number and types of shares in the company, as well as how many shares are to be sold to the purchaser.
- The purchase price for the shares. This is usually based on the market valuation for the shares being sold, and if often based on an accountant or business broker’s determination of the company’s value. Sometimes, the purchase price for the shares can be impacted by the results of any due diligence enquiries.
- The warranties given by the seller. These warranties vary between each agreement, but often include warranties that the shares are in fact owned by the seller and will be transferred to the purchaser free of any security interests. The seller may also give warranties that the assets used by company in its day-to-day business, are owned by the company. These warranties, although fairly straight forward and common sense, are an important safety net for purchasers when entering into an agreement to buy shares.
- Undertakings about the conduct of the business. These undertakings ensure that the seller continues to run things “business as usual” and will not commit the company to any major obligations, agreements or liabilities before settlement without the purchaser’s consent.
- Conditions to the agreement such as due diligence or the purchaser arranging finance.
How else can we help?
In addition to preparing, reviewing and negotiating the Share Sale and Purchase Agreement, we can assist you through the other key aspects of the transaction. For example:
- If you are purchasing the shares, we can help you to conduct due diligence on the company, including checking if there are any security interests registered against the shares and reviewing any agreements the company has entered into with its landlord, suppliers or customers.
- We would also review the company’s Shareholders’ Agreement and Constitution and advise you on how this may impact your rights to either buy or sell the shares in the company.
- If you are the seller of the shares, we can prepare any additional documents that are required to complete the share sale such as company resolutions, waivers of pre-emptive rights, directors’ appointments and resignations and share transfer forms.
- If the share purchase is fully or partially financed by the vendor (i.e. vendor finance), we would also prepare the loan agreement and the appropriate security documentation.
- We assist with the settlement of the share sale, including making arrangements for payment of the purchase price and updating the company records with the New Zealand Companies Office.
Our commercial team has the practical business knowledge and experience to assist you throughout the whole transaction and ensure that your best interests are represented.