Share Purchase Agreement Information
A Share Purchase Agreement, or Stock Purchase Agreement, is used to transfer the ownership of shares in a company from a seller to a purchaser.
Who Needs a Share Purchase Agreement?
Any time an individual or corporation is selling or purchasing shares in a company to or from another person or business entity, a Share Purchase Agreement should be used.
For example, if you own a business with two partners in which you all have equal shares, and one partner withdraws from the partnership, you can use a Share Purchase Agreement to purchase his or her stocks in the business.
When purchasing all of the shares in a business (one hundred percent of the shares), you can use a Purchase of Business Agreement instead.
What Information is Included in a Share Purchase Agreement?
A Share Purchase Agreement includes information about:
- The purchaser and seller of the shares
- The company from which shares are being transferred
- The number of shares being sold and their value
- What law governs the agreement
- What types of shares are being sold
A Share Purchase Agreement also includes payment details, such as whether a deposit will be required, when the full payment is due, and the closing date of the agreement.
Types of Shares
Generally, two types of shares and two types of classes are used to define shares. The two most common types of shares are:
Voting. Voting shares allow the shareholder to vote on corporate policy and board of director decisions.
Non-voting. Non-voting shareholders are not entitled to vote on corporate policies or board of director changes.