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SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT (the "Agreement") made and entered into this ________ day of ____________, _________ (the "Execution Date"),
BETWEEN:
____________________ of ______________________________(the "Seller")
OF THE FIRST PART
and
____________________ of ______________________________(the "Purchaser")
OF THE SECOND PART
BACKGROUND:
IN CONSIDERATION OF and as a condition of the parties entering into this Agreement and other valuable consideration, the receipt and sufficiency of which consideration is acknowledged, the parties to this Agreement agree as follows:
IN WITNESS WHEREOF the Seller and Purchaser have duly affixed their signatures under hand and seal on this ________ day of ____________, _________.
SIGNED, SEALED, AND DELIVERED
in the presence of:
____________________ (Seller)
Witness: ______________________ (Sign)
Per:_________________________ (SEAL)
Witness Name: ______________________
____________________ (Purchaser)
A Share Purchase Agreement can sometimes be called a:
A Share Purchase Agreement, also called a Stock Purchase Agreement, is used to transfer the ownership of shares (also called stock) in a company from a seller to a buyer.
Shares (or stock) are units of ownership in a company that are divided among shareholders (also called stockholders).
The amount of shares held by a shareholder determines their percentage of ownership in the company and the dividend payment that they are eligible for, if the company pays out dividends. A dividend payment is money paid to shareholders, usually resulting from a distribution of a company's annual profits.
A Share Purchase Agreement should be used any time an individual or corporation is selling or purchasing shares in a company to or from another person or business entity.
For example, if you and two business partners all have equal shares in a company and one partner wishes to withdraw, a Share Purchase Agreement can be used to purchase the withdrawing partner's shares.
When purchasing all of the shares in a business (100% of the shares), it's recommended that you use a Purchase of Business Agreement instead.
A Share Purchase Agreement generally includes information about:
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.
When creating a Share Purchase Agreement, it is important to include details about the shares being sold, such as the type of shares. Common, preferred, voting, and non-voting are all terms that can be used to describe shares.
The class of shares, common or preferred, can impact the shareholder's portion of company profits or the amount they receive in the event that the company is liquidated, and whether a shareholder has voting or non-voting shares determines whether the shareholder is or is not eligible to vote at shareholders' meetings.
A common share is a type of share that is held most frequently by shareholders. A preferred share is generally a more valuable type of share that can mean different things to a company depending on what was agreed upon during the company's incorporation. Oftentimes, preferred shares are non-voting. In addition, shareholders with preferred shares will typically receive priority for profits (or liquidation, if it occurs) as compared to common shareholders.
Keep in mind, most corporations will have common shares, but not all will have preferred shares.
Companies that offer multiple types of shares will also sometimes have a series (Class A, Class B, Class C, etc.), which can be worth different monetary amounts. For instance, 100 Class A Common Voting Shares may not be worth the same value as 100 Class B Common Voting Shares.
A company's share structure can often be found in the company's Articles of Incorporation.
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