A Share Purchase Agreement is an agreement for the sale and purchase of shares in a private limited company. It is used to transfer and assign ownership of the shares from the seller to the purchaser.
A Share Purchase Agreement sets out the terms and conditions of the sale and purchase of the shares. It sets out the critical details of the transaction, such as the number of shares purchased, the purchase price and how the purchase price will be paid.
In order to protect the purchaser, the Share Purchase Agreement includes certain assurances from the seller in the form of representations and warranties. The Share Purchase Agreement also includes certain conditions that must be fulfilled by each party before the sale takes effect.
When an individual or corporation is selling or purchasing shares in a company to or from another person or business entity, a Share Purchase Agreement should be used. The Share Purchase Agreement sets out the respective parties' obligations in connection with the sale of the shares and protects both parties if such obligations are not met.
When drafting a Share Purchase Agreement, it is important to focus on a number of key clauses, in particular: