Share Sale and Purchase Agreement - (Sale by Individual(s)) With Real Property No Subsidiaries
This Share Sale and Purchase Agreement (Sale by Individual(s)) - With Real Property, No Subsidiaries is one of a number of share sale agreements in this subfolder which deal with the sale of a company through the sale of shares. The first four agreements in the subfolder deal with a sale by a corporate entity; i.e where the seller is a company. The second four agreements relate to a sale by specific individual sellers.
If you are not sure which share sale agreement is right for you, please consult the Share Sale Agreement Comparison Matrix.
This Share Sale and Purchase Agreement can be used where an individual or group of individuals are selling a company which has subsidiaries (i.e. a group of companies). It is suitable for a Management Buy-In. The sale is by way of a sale of shares. The company being sold is the owner of real property (whether freehold or leasehold). At its most basic level, it is possible to transfer the ownership of shares by the sellers executing a stock transfer form and delivery to the buyer together with the share certificate (or an indemnity if the certificate has been lost). The buyer will usually need to have the stock transfer form stamped and pay the stamp duty on it. The buyer will then lodge the stock transfer form with the company and will become a member of the company once the board has approved the transfer and the name of the buyer has been entered in the register of members. The buyer will be entitled to a share certificate within two months. Although this process is sufficient to transfer ownership of the shares to the buyer, because the buyer will be acquiring all the assets and liabilities of the company when acquiring the shares, the buyer will usually require a formal share sale agreement. The sellers may also wish to have a formal agreement in order to clarify their liability or ensure clear payment terms.
This agreement is in open format. The form fields should be completed and the wording should be adjusted to suit your purposes. In this agreement, the Parties are the Individual Sellers and the Buyer (the latter of which is assumed to be a company but the agreement can be amended to make the buyer an individual or individuals).
In clause 1 (Interpretation), please choose the appropriate wording for the definition of the Accounts. If the group of companies being sold has consolidated accounts, please choose the wording
Clause 3 (Consideration) refers to Schedule 8 which states that the purchase price is payable to each individual pro rata according to their shareholdings. There is an option to choose between
Clause 6.2.1 specifies that the maximum liability of the sellers under this agreement for all claims aggregated together is the purchase price. However, there is an exception for breaches of the warranties in paragraph 1 of
However, in clause 6.2.2 the sellers are given some protection from claims being brought for trivial breaches and so it is possible to specify a minimum value of each claim (at clause 18.104.22.168). If the value falls below this amount, then the claim is ignored (this is the ‘X’ amount in the form field). A figure should be inserted in the form field such as £1,000 (the amount will vary depending on the total value of the transaction). Furthermore, at clause 22.214.171.124, it states that no claims may be brought unless all the claims of the ‘X’ amount equal or exceed a threshold (the ‘Y’ amount) such as £10,000. So, in our example, if the buyer has 9 individual claims of £1,000, he will not be able to make a claim because the threshold of £10,000 has not been reached. However, if he has 10 claims of £1,000 then he will be able to make a claim. Moreover, the buyer will be able to claim for the whole amount, not just the excess over the £10,000 threshold.
Clause 7 and clause 8 protect the buyer by placing restrictions on the use of confidential information and preventing the sellers from setting up a competing business or soliciting the Company’s customers.
Clause 9 is an optional clause where the buyer gives
Clause 10 provides a list of indemnities given by the sellers to the buyer. The wording in square brackets can be used so as to give the Company the benefit of the indemnities if required. These cover specific risks and further matters that arise or due diligence may be included
Clause 11 deals with publicity of the sale and purchase. If the parties wish to make a press announcement, then the wording in square brackets in clause 11.1 should be retained.
Clause 13 makes it clear that no third party can enforce any of the provisions of the agreement. If required clause 13.1 may be amended to include any other clauses which give rights to third parties which are intended to be enforceable should be included in this clause.
Clauses 14-23 are “
A detailed set of warranties are included
Schedule 6 can be used to insert any provisions regarding pension arrangements.
Schedule 7 contains arrangements for completion and should be tailored to the transaction. It should be used in conjunction with the “Completion Checklist” which can be found in the related documents below.
Share Sale Agreements are complicated documents. If in doubt you should seek professional advice prior to entering into one.
Once you have purchased access to the appropriate document folder click on the “Download Document” button below. You will be asked what you want to do with the file. It is recommended that you save the document to a location of your choice prior to viewing.