This article was written by Shambhavi Singh, by Bharti Vidyapeeth. She is a graduate of the LawSikho.com`s Institutional Finance and Investment Laws (PE and VC transactions). Here, she discusses “How to develop a share purchase agreement.” The status of the company and the good level of the market must be clearly highlighted. The company`s capital structure, including the list of directors and the number of shares of the seller, must be indicated. In addition, this clause contains confirmation of the seller`s ownership and rights to the company`s shares and property, the law enforcement status, any ongoing or imminent litigation or litigation, information on loans and related agreements, as well as the fairness of the accounts and financial and other information provided by the seller. It is good practice to declare that the seller has the unfettered right to sell the shares and transfer them to the buyer, there are no restrictions imposed by other contrary agreements or court orders. The precedent clause should be comprehensive, which provides for all necessary authorizations, authorizations and authorizations, both inside and outside, and the person responsible for obtaining these authorizations should also be indicated. Normally, a clause relating to the right of the purchaser to waive a condition is also included in order to provide flexibility in the event that certain routine authorizations that do not affect a transaction do not come or do not take long to do so. The precedent clause should also provide for the performance of all insurance, guarantees, obligations, implementation of agreements and agreements concluded under the agreement. The share purchase agreement is used when an organization or individual buys or sells the shares of the company with another person or organization. There are two types of shares: voting shares and non-voting shares.
Voting shares give the privilege of having an opinion on the director`s decision and a voice on policy development, while shareholders who do not have the right to vote are not entitled to vote on the board of directors and policy development. Agreements can be negative or positive and provide each party with a degree of consolation in its past and the proposed measures with respect to the GSB. The buyer also requires the seller to agree on the management of the business between signing and closing. Acts authorized during this period generally require the consent of the purchaser, although the company is, in the meantime, still technically managed by the seller. This is primarily a repetition of the representation and guarantee clause, but it is included in the share purchase agreement to protect the interests of the parties. Some of these guarantees will disappear at closing, while others, such as the law and the holding of shares, will continue well beyond the conclusion. Ideally, there should be no following conditions in a share purchase agreement, but this becomes necessary, though rarely. There are authorizations and commitments that are always re-remuary under the following conditions. However, the buyer should be protected in the event of a violation of one of the following conditions. In general, the information contained in a share purchase agreement, such as information provided by the company, sellers and purchasers of shares, the dispute settlement clause, termination, the type of shares sold, the number of shares sold, the price of the shares sold and payment details.