Free Share Purchase Agreement

A Share Purchase Agreement is a sale contract that transfers and assigns shares from a seller to a purchaser.

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A corporation can have a single shareholder or multiple shareholders. The former is more commonly the case with mom and pop companies. In contrast, almost all larger companies have more than one shareholder.

Regardless of the number, a shareholder can decide to sell their shares at any given moment. To do that, they would draft a Share Purchase Agreement to execute the trade.

What Is a Share Purchase Agreement?

Shares are bought and sold all the time. Every transfer of shares must be documented with a Share Purchase Agreement. This document can take many forms. Even if you're to trade shares of public companies with your online brokerage account, you can count on all trades to be documented.

The agreement has to contain specific provisions and restrictions to achieve its purchase in a more private venture. This is a type of business contract that could require the help of a contract lawyer.

The Share Purchase Agreement is often used when shares are sold in countries of their legal systems.

Other Names for Share Purchase Agreement

Depending on your state, a Share Purchase Agreement may also be known as:

  • SPA Agreement
  • Share Sale Agreement
  • Stock Purchase Agreement
  • Share Purchase Contract

Who Needs a Share Purchase Agreement?

Most corporations will need a Share Purchase Agreement at some point. If you want to sell or purchase shares, you may need this document.

Why Use 360 Legal Forms for Your Share Purchase Agreement

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Create your own documents by answering our easy-to-understand questionnaires to get exactly what you need out of your Share Purchase Agreement.

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How to Create a Share Purchase Agreement with 360 Legal Forms

The transfer of shares from one shareholder must be appropriately documented. The first step is to complete a Share Purchase Agreement. Having a ready-to-use template is likely to prove incredibly useful if you are involved in a corporation where the shares change hands often.

Let 360 Legal Forms help with our extensive library of attorney-vetted legal forms. The process is fast and easy. All you have to do is fill out our easy-to-understand questionnaire. Once complete, simply download your form as a PDF or Word document from your secure online account.

What Information Will I Need to Create My Share Purchase Agreement?

To create your document, please provide:

  • Company details: The legal name of the company whose shares are being transferred.
  • Effective date: The date when the agreement is to become effective.
  • Seller details: The name and contact information of the seller of the shares.
  • Buyer details: The name and contact information of the buyer of the shares.
  • Governing law: Specify the governing state where the transfer of shares is taking place.
  • Share type: Describe the type of shares being transferred.
  • Par Value: Specify the shares' value as specified in the corporate charge, not the market value.
  • Transferred shares: The number of shares to be transferred.
  • Restrictions: Specify any conditions the corporation might have regarding share transfers.
  • Closing date: Enter the date on which the purchase is to be completed.
  • Signatures: Both the buyer and the seller need to sign the document.

Share Purchase Agreement Terms

  • Share: A single unit of capital or equity ownership in a corporation.
  • Shareholder: A person or legal entity owning shares in the company.
  • Board of Directors: A group of people appointed to manage and oversee the corporation on behalf of the shareholders.
  • Chairperson: Commonly known as the chairman of the board of directors who presides over formal meetings.
  • Dividend: A corporation's profit distribution to shareholders. Not all companies pay dividends.
  • Warranties: Contractual statements from the seller.
  • Restrictive Covenants: Restrictions placed on the buyer about what they can do with the shares.
  • Non-competition: An agreement to not compete for a period, which is placed on the shares' buyer.
  • Non-solicitation: A clause preventing the seller from soliciting, most commonly the corporation's employees in question.

Share Purchase Agreement Signing Requirements

The Share Purchase Agreement needs to be signed by both the purchaser and seller of the shares. Before you put pen on paper, you want to review all the details and provisions for accuracy and your comfort level. It is not necessary to get the agreement notarized.

What to Do with Your Share Purchase Agreement

The Share Purchase Agreement, once signed, becomes part of the corporation's internal documentation. Also, the buyer and the seller should hold on to a copy of the agreement.

Frequently Asked Questions

Even though the terms "share" and "stock" are often used interchangeably, there are significant differences. The stock represents the ownership of a corporation as a whole. You can own stocks in multiple companies. As to how much stock, that depends on the number of shares owned. If a company has an outstanding float of 1 million shares and you own 10 shares, for example, you would own 1/100,000th of the company.

A Share Repurchase Agreement is used when a corporation wants to buy back shares. It requires a specific contract that aims to protect both the corporation and its shareholders.
Corporations may buy back shares if the directors think that the market is undervaluing the shares and thus, it's an opportunity to repurchase the shares and the demand is likely to push the price of the shares up, which benefits all other shareholders.

A stock certificate documents the ownership rights in a number of shares. All corporations use some form of stock certificates as formal documentation. Such a certificate would at least contain the details of the corporation and the shareholder.

It is a rule stating that a shareholder who is selling shares must first offer them to the other shareholders of the same company. As such, the right of first refusal is a way to protect the corporation from potentially undesirable new shareholders.

One advantage of the Share Purchase Agreement is that there are no liabilities. Once the purchase is complete, the previous shareholder is no longer responsible if the company goes into debt. As you know, corporations are legal structures separate from shareholders and directors. In contrast, one disadvantage is that there is always a risk. Share ownership is often riskier than owning other assets. This is where the warranties of the purchase could become essential.

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Applicable to all 50 states
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Our documents are vetted by lawyers and are applicable to all 50 states.