There are a few reasons to create a share purchase contract: what is a share purchase agreement? A share purchase agreement is an essential legal contract that documents the specific details of an agreement between the purchaser of shares and the seller and protects both parties to the transaction. If you`re the sole employee of your company, this may be a step you`re jumping. Although if your plans are supposed to grow the business, creating shares and a deal can help you when the time comes for expansion. There are many reasons for reaching an agreement: you need a share purchase agreement if you want to sell shares in your company. Before entering into an agreement, a Memorandum of Understanding (MOU) is established to explain the proposed sale. A buyer should have due diligence and ensure that the sales contract has the same conditions as the LOI. Since most transactions have a period between the date the parties sign and the closing, a section on alliances is established to define activities that each party should refrain from doing during that period. This usually includes a long list of actions that must occur during this period, as well as actions that are prohibited. The first part of your share purchase agreement is often referred to as a preamble. This section identifies the agreement, identifies the parties and sets the contract date.
In the preamble, you will often see parties called «sellers» and «buyers.» The first item in your share purchase agreement is the «Definitions» section. In this section, the different definitions used throughout the agreement are presented in alphabetical order. As a general rule, you will find the terms defined in this section, which are activated throughout the agreement to show their meaning. These conditions are not isolated, but are used throughout the contract to have a common language between «seller» and «buyer. In this section, the precise conditions of the sale of the stock are clearly defined. This section indicates the language of the seller transferring or selling a certain number of shares to the buyer or buying the buyer from the seller.