The acquisition of shares represents the acquisition of the operational activity of a company. None of the existing contracts with the company change. When a shareholder sells his shares in a company, he achieves a total rupture of the relationship between him and the activity concerned. However, the buyer will insist on a number of contractual commitments concerning the company (guarantees) that will continue to bind the shareholder after the sale. A SPA can also serve as a contract for renewable purchases, for example. B a monthly delivery of 100 widgets purchased per month over the course of a year. The purchase/sale price can be fixed in advance, even if the delivery is fixed later or distributed over time. SPAs are being set up to help suppliers and buyers predict demand and costs, and they are becoming increasingly critical as the size of transactions grows. Regarding the fundamental content of the share purchase agreement, we should mention the most common clauses: guarantees and liabilities must be checked to ensure that there is no false statement. If this happens and is found later, there will be legal actions and possible remedies. After the transaction, there may be an adjustment of the purchase price in which the seller must refund the buyer in case of misrepresentations. Prior to the conclusion of the agreement, a Memorandum of Understanding will be established to explain the planned sale.
A buyer must have due diligence and ensure that the sales contract and the memorandum of understanding have the same conditions. The seller should specifically look at the sales and purchasing section and the guarantees and insurance section. The period of sale and purchase should have exactly the same conditions as the declaration of intent. If differences are found, this is likely due to the buyer`s due diligence and must be negotiated before the share purchase agreement is concluded. It should be borne in mind that it is possible that a signature and a closure take place in the same act and not at different times. However, in practice, these cases are reduced to the purchase of simple, barely complex companies, which are not obliged to take into account a condition or factor before the acquisition. Since the buyer inherits a business, buying shares usually carries a much higher risk than buying assets. This justifies the inclusion of guarantees necessary for the protection of the buyer. Share purchase agreements can be used in all cases where one entity or natural sells shares to another. Agreements are most often used when the relevant shares are transferred to companies in two different countries under two different legal systems or when the shares are sold outside a standard trading venue or outside an exchange.
The signature is therefore the date on which the parties sign the contract and give their consent to the legal activity, i.e. the date of performance of the contract. The signing of a share purchase agreement is usually preceded by a legal review or due diligence, which is the legal, accounting, financial and technical verification of the current situation of the company carried out by the buyer. . . .