Document Support - Share Purchase
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08 November 2013
A share purchase usually involves the buyer purchasing the
complete company, lock stock and barrel. The documentation would
therefore need to be comprehensive and detailed enough to cover every
eventuality and would usually include the following:
- Transfer of the shares and new ownership of the company.
- Appointment and removal of directors, company officers,
auditors and staff.
- Warranties covering all areas of the company and the
- Any disclosure by the seller highlighting facts which are
not correct or covered by the warranties, usually in the form of a
- Limiting the liability and time period the seller remains
exposed to a breach of warranty.
- The buyer would need to seek specific warranties and
disclosure from the seller to avoid over general disclosure.
- Restrictive covenants will need to be put in place to
ensure the seller does not compete with the buyer, take their
employees, etc. These covenants must not be overly general and must be
drafted carefully to ensure that they can be enforced.
- Indemnities - where the buyer has discovered a problem
while carrying out the due diligence he may seek an indemnity against
any problem arising in the future.
- Tax Indemnity and reimbursement to ensure that all accounts
and taxes have been correctly dealt with.
- Completion Accounts showing the net position of the
company, if the company’s position is either better or worse than that
which was agreed between the parties, the purchase price would be
either increased or decreased. The buyer would then either pay the
seller an additional amount or seek a reimbursement from the seller.
- Schedules – there will be various schedules covering a
range of issues set out in the agreement, such as transfer of the
pension scheme, listing intellectual property rights and any earn-out
When it comes to preparing the legal documentation it is
usually the buyer’s solicitors who will carry out this task.
Written by Muhammed Poswall
About the Author
Solicitors offer services and advice for litigation,
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Article Published/Sorted/Amended on Scopulus 2013-12-17 13:42:38 in Legal Articles