Share Sale and Purchase Agreement - Sale of a Percentage of Existing Shares
This Share Sale and Purchase Agreement – Sale of a Percentage of Existing Shares is designed for a sale of part (a percentage) of a company, rather than a sale of 100% of the shares where the existing shareholders exit the business.
What does Share Sale and Purchase Agreement – Sale of a Percentage of Existing Shares do?
It records the terms on which an existing shareholder sells a proportion of their existing shares to a buyer, so that the seller remains a shareholder after completion.
When should you use Share Sale and Purchase Agreement – Sale of a Percentage of Existing Shares?
This agreement is drafted on the assumption that:
- The seller holds 100% of the current issued share capital.
- The seller is selling some of those existing shares to the buyer.
- The selling percentage is not more than 20% of the issued share capital. At that percentage level, no meaningful control of the company is lost and there is no need for PSC registration by the buyer. However, the seller will be diluting their shareholding by selling the shares.
- There is no issue of new share capital (this is a sale of existing shares). If the company is proposing to issue new shares, a share investment agreement may be more appropriate.
- No tax covenant is included and customers may need to consider seeking separate tax advice.
What does Share Sale and Purchase Agreement – Sale of a Percentage of Existing Shares cover?
This is a short-form, basic agreement. It includes provisions on:
- The sale and purchase of the shares and the purchase price
- Conditions and completion
- The buyer’s director appointment
- Warranties and limitations on claims
- Confidentiality and non-competition
- Rights of third parties and interaction with the articles
- Standard contractual provisions (including notices and governing law)
It also includes schedules covering the company, consideration, post-completion shareholdings, and warranties.
Share Sale and Purchase Agreement - Sale of a Percentage of Existing Shares is part of Corporate. Just £38.50 + VAT provides unlimited downloads from Corporate for 1 year.