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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 is also known as a:
A Share Purchase Agreement is a document a shareholder may use to transfer their ownership of company shares (also called stock) to a buyer.
To be clear, a share is a unit of ownership in a company and a shareholder is an individual or organization who buys shares in a company (thus legally owning a percentage of the company).
For example, if a company issues 10,000 shares and a shareholder owns 1,000 shares, the shareholder legally owns 10% of the company. Typically, this means they are entitled to 10% of the company's profits and 10% of the votes in corporate resolutions.
You should use a Share Purchase Agreement whenever you (as an individual or an organization) are buying or selling shares in a company. If your business entity cannot issue shares (e.g. you are a sole proprietor, an LLC, or in a partnership) you may consider using an Assignment of Partnership Interest or a Purchase of Business Agreement instead.
While a share purchase is the sale of someone's ownership in a company, an asset purchase is the sale of a company's individual assets or liabilities. To elaborate, a company asset is a tangible item or intangible resource, such as:
The key takeaway is that a seller will retain ownership in a company with an asset purchase, but will forfeit ownership with a share purchase.
It's important to include details about the type of shares being sold in your Share Purchase Agreement because the type of share will determine the buyer's voting rights, dividend yields, and percentage of ownership in the company.
Generally, there are two types of shares that a company distributes to its shareholders: preferred and common shares.
In most cases, preferred shares have the most potential for short-term gains because of the following reasons:
On the other hand, common shares often have the most potential for long-term gains because of the following reasons:
In addition to the preferred and common monikers, a company may refer to their shares with a specific class structure. There are generally three classes (Class A, B, and C) used to describe shares with distinct characteristics. For instance, a Class A share may have more voting rights per share than a Class B or C share. To learn more about a company's share structure, you may consult the company's Articles of Incorporation or the public listing in which the shares are advertised.
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