The second step is the transfer of shares. At the end of the second stage, the buyer becomes the owner of the shares that were part of the sale transaction. This second stage is often referred to as a “colony.” The share purchase agreement should make it very clear what is being sold, to whom and for how much, as well as all other bonds and debts. Shareholders are generally considered to be the true owners of the business. The agreement between the company and the shareholders, which describes the rights of obligation, is referred to as the “shareholders` pact”. Various provisions are an integral part of a well-developed agreement. Many embellish these terms and consider them a standard boiler platform when they are actually important. It is a place where lawyers can store terms that could be overlooked. An essential distinction should be made between buying shares and buying assets. An investment transaction includes the purchase or sale of some or all of a company`s assets, such as.
B equipment, inventory, real estate, contracts or leases. Buying assets can be beneficial because it allows a buyer to selectively reorient himself with the assets he buys. In addition, the acquisition of assets allows an acquirer to acquire ownership of a business without the liabilities that would accompany the assets when buying shares. In the case of the purchase of assets, a significant SD is still required, especially with regard to the ownership of these assets and the rights of pawn. The completion of a stock or asset acquisition depends on many considerations and the objectives of the purchaser. Representations, guarantees and commitments made in a G.S.O. should survive the execution and delivery of the OSG and the closing of the transaction, beyond the closing of the transaction. Some misrepresentations and breaches of the warranty may not be visible until after completion. The survival of representations, guarantees and pacts (as well as compensation terms) beyond the conclusion of the transaction protects the buyer if he receives less than he negotiated. However, the parties should carefully consider the existing legislation of the OSG to determine how the jurisdiction assesses and imposes statutes of limitations. Some jurisdictions prohibit exceeding contractual rights beyond the jurisdiction`s statute of limitations, even if the parties to a CSE explicitly agree on a language of survival that allows a right to the infringement to go beyond the jurisdiction`s statute of limitations.
The terms of compensation eventually granted by the buyer or seller are also presented, which covers all costs that may result from the transaction due to conditions that were met prior to the closing of the transaction. A special tax treatment to which the buyer or seller may be entitled is also mentioned in the contract. A share purchase agreement should be used whenever a person or company sells or buys shares in a company or another person or company. The buyer follows in the seller`s footsteps as a shareholder or director, but the employees, contracts, real estate, etc. of the company remain the property of the company. The transfer of the company`s assets is therefore not necessary, so a sale of shares can often be completed without the participation of third parties. The purchase of shares is therefore often much more discreet than a purchase of assets. In essence, due diligence is the process by which the purchaser of the target shares examines the company`s activities, key people, documents and assets.