This month we have drafted a new short form version of our sale and purchase agreement (SPA) to reflect situations where shareholders are looking to sell an existing chunk of their shares to a new shareholder; rather than selling 100% of their shares and exiting the business entirely.
This new template is more streamlined than any of our existing SPAs with short form warranties, all to reflect the fact that the selling shareholder will continue to be the majority shareholder in the business going forward.
We have made a number of assumptions in drafting this new template, most particularly that the selling percentage amounts to not more than 20% of the issued share capital in the company. At this percentage level no meaningful control of the company is lost and there is no need for PSC registration by the buyer.
Note that there is no issue of new share capital rather this is a sale of existing shares. For a company proposing to issue new shares to for example an investor, our Share Investment Agreement (Cash) may be more appropriate.
This new template will be of interest to all directors and shareholders of small private companies.
We will be adding further share sale agreement templates to our Corporate folder of documents in due course to take in different assumptions and selling percentages.
The contents of this Newsletter are for reference purposes only and do not constitute
legal advice. Independent legal advice should be sought in relation to any specific