What is a Share Purchase Agreement?
Shareholders in a company use a Share Purchase Agreement, to transfer their ownership of shares to someone new. When executed properly, this document becomes a legally binding agreement. The buyer then gains the rights and responsibilities associated with being a company shareholder, and the seller withdraws from the company. The amount of shares you own determines your stake in a company and your eligibility for dividend payments. For example, if a company issues 10,000 shares and a shareholder owns 1,000 shares, the shareholder legally owns 10% of the company. Typically, this means they are entitled to 10% of the company's profits and 10% of the votes in corporate resolutions.
Which Net Lawman Share Purchase Agreement?
Here we guide you to the most appropriate share purchase document for your requirement. We are not concerned with a deal to buy all the shares. That would need a rather different document.
This small set of documents covers a situation where some person or company buys into a company either by subscribing for new shares or by buying existing shares from their owners. There may be several sellers or several buyers, any of whom could be a company.
Let us assume you are coming in for maybe forty per cent. The scenariois that two director-shareholders are in constant stalemate and have asked you to buy in and act as chairman. Meanwhile, three minority shareholders want out. You have agreed to buy all their shares and subscribe to new shares at an advantageous price. Maybe you have also agreed to a loan to the company. So with that commitment, you really need an agreement that wraps things up tightly. You need a Shares purchase and subscription agreement with a full choice of warranties.
At the last minute the three old guys who wanted out decide they like you and they would prefer to stay. You go along with this. So now the deal involves only a share subscription agreement. But of course you still need those warranties.
Now you have slept on that deal and you have second thoughts. You like the business, but the thought of managing those minority shareholders disturbs you. So you decide to go with just one shareholder and buy out all the others. They may not be happy but they agree to sell. So now you do not need to subscribe for new shares. You will have all the shares you want by buying them.
Those are the options: buy shares or subscribe to new shares - or both. Our documents reflect just those options. We also offer a fourth option which is a simpler document with no warranties. This document is not for you. It is for a situation where the shareholders invite someone to become a shareholder by subscribing to new shares in circumstances where that invitee either knows the company already or is coming in on terms he dares not challenge.
She may be a director whom the shareholders wish to motivate with a shareholding. She may be the company’s accountant. She may be the chairman’s daughter. The point is that she is not in a position to demand the level of protection that you have demanded. She is very happy with the Net Lawman shares subscription agreement which does not include the raft of warranties.
