Buying a Business - Through Company Acquisition
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24 May 2011
There is a potentially easier way for a buyer to purchase a business,
where the business is owned and run by a company.
In a nutshell, this is possible, where:
- The business is set up is in the form of a company
- All the goodwill, assets and stock of the business are owned by the
- The company only owns the business being bought and no other
businesses or properties
The process involved is as follows:
1. The company's solicitor drafts a Share Transfer Agreement, whereby
the buyer purchases the shares from the Director(s) of the company.
2. The company holds a general meeting whereby the Directors vote (in
the best interests of the company) in favour of the share transfer, the
retirement of the director(s) and the appointment of the buyer as new
director. They also decide the date this will occur. The company
solicitor can help draft the relevant minutes of the meeting. This
decision of the directors must be registered with Companies House using
the relevant forms.
If both the above are completed simultaneously, the buyer can
successfully purchase all the shares in the company and be appointed
the director of the company.
The above method will effectively transfer the control of the company
and therefore the business to the buyer, including the company's
goodwill, assets, stock and property.
Any property occupied by the business/company should also be in the
name of the company. This will ensure that the property (whether
freehold or leasehold) is also transferred with the business to the
buyer, without the need for a separate transaction that deals
specifically with the transfer of the freehold or leasehold, which can
be complex transactions in themselves.
It is important that all legal documents should to be drafted by a
lawyer. If you are contemplating purchasing a business, then get in
touch with one of the lawyers in our Commercial Department who will be
happy to advise and assist.
Inam Ali is a Solicitor at Lawdit, specialising in
Commercial Property and Intellectual Property Law and can be contacted
via email: email@example.com
About the Author
Lawdit Solicitors offer services and
advice for litigation, commercial contracts, Intellectual Property and IT legal
agreements. We are experts in commercial law with a heavy emphasis on
Intellectual Property, Internet and e-commerce law. Lawdit is a member of the
International Trademark Association, the Solicitors' Association of Higher Court
Advocates and we are the appointed Solicitors to the largest webdesign
association in the world, the United Kingdom Website Designers Association.
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Article Published/Sorted/Amended on Scopulus 2011-06-02 12:11:27 in Legal Articles