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Share Purchase Agreement

We can help you through the entire process of selling or buying a company or provide limited advice reviewing the share purchase agreement.

The most common way to carry out a change of ownership in a company is to sell the company’s shares. All or parts of the company’s shares are sold to the buyer, who after payment is entered in the company’s share register as an owner. The company is the same and can continue operations as usual.

It is in the seller’s interest to leave the company and any legal issues behind after the completion of the sale. However, there are certain legal liabilities that may come to light sometime after the sale. In combination, the law does not give strong protection for the buyer. One of the main purposes of the Share Purchase Agreement is to protect the buyer’s interest and to keep the seller "on the hook" for warranties etc.

Legal Issues That May Arise For Share Purchases:

  • Determine the price - part cash, part staged payment related to company performance?
  • Choose the conditions precedent that is relevant for the deal (e.g. listing rules, clearance from the tax authority, clearance from the relevant competition authorities, regulatory or licensing consent, third party consent)
  • Flexible and deferred payments, and earn-out clauses?
  • Warranties and indemnities - about the state of the various assets, how breaches of warranties will compensate the buyer
  • Restrictive covenants - protection against competition from the seller/buyer, non-solicitation obligations etc.

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