What is a Share Purchase Agreement?

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.

Who should use a Share Purchase Agreement?

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 ProductLink code="GPRTAS" text="Assignment of Partnership Interest" or a ProductLink code="CBUSPS" text="Purchase of Business Agreement" instead.

What is the difference between an asset purchase and a share purchase?

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: Equipment Inventory Real estate Goodwill (i.e. a company's positive reputation) Intellectual property (e.g. patents, business methods, etc.) 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.

What is the difference between preferred shares and common shares?

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: No voters' rights Dividends are issued to preferred shareholders first Share value is calculated on par (i.e. at face value) and is affected by interest rates Shares are callable (i.e. the share issuer has the right to redeem shares from the market after a time) On the other hand, common shares often have the most potential for long-term gains because of the following reasons: Voters' rights Dividends are issued to shareholders last Share value is regulated by market demand and supply Shares are not typically callable 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.

Free Share Purchase Agreement

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Share Purchase Agreement

Share Details

What is the name of the company?

Name:

Where is the company located?

Alberta

How many shares are being sold?

Number of Shares:

What is the class/series of the shares?

Class/Series Description:

(e.g. Class A voting, Class C redeemable, Class D Series 1, etc.)

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Frequently Asked Questions

Why is the company location important?Your Share Purchase Agreement will be governed by the laws of the Province or Territory that you choose. Typically you would select the Province or Territory where the company is incorporated or registered. Your Share Purchase Agreement will be tailored according to the governing law you choose.

Your Share Purchase Agreement

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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:

The Seller is the owner of record of __________ ____________________ shares (the "Shares") of ____________________ (the "Corporation").
The Seller desires to sell the Shares to the Purchaser and the Purchaser desires to purchase the Shares from the Seller.

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:

Purchase and Sale
Except as otherwise provided in this Agreement, all monetary amounts referred to in this Agreement are in CAD (Canadian Dollars).
The Seller agrees to sell and the Purchaser agrees to purchase all the rights, title, interest, and property of the Seller in the Shares for an aggregate purchase price of $__________ (the "Purchase Price").
A fixed sum of $__________ will be payable on closing of this Agreement.
All payments will be in the form of certified cheque, wire transfer, or bank draft of immediately available funds. In the case of a direct wire transfer the Seller will give notice to the Purchaser of the bank account particulars at least 5 business days prior to the Closing Date.
Representations and Warranties of the Seller
The Seller warrants and represents to the Purchaser as follows:
1. The Seller would not be recognized as an issuer, insider, affiliate, or associate of the Corporation as defined or recognized under applicable securities laws and regulations.
2. Except as provided in the incorporating documents of the Corporation or as indicated on the face of the certificates for the Shares, the Purchaser would not be prevented or restricted in any way from re-selling the Shares in the future.
3. The Seller is the owner in clear title of the Shares and the Shares are free of any lien, encumbrance, security interests, charges, mortgages, pledges, or adverse claim or other restriction that would prevent the transfer of clear title to the Purchaser.
4. The Seller is not bound by any agreement that would prevent any transactions connected with this Agreement.
5. There is no legal action or suit pending against any party, to the knowledge of the Seller, that would materially affect this Agreement.
Representations and Warranties of the Purchaser
The Purchaser warrants and represents to the Seller as follows:
1. The Purchaser would not be recognized as an issuer, insider, affiliate, or associate of the Corporation as defined or recognized under applicable securities laws and regulations.
2. The Purchaser is not bound by any agreement that would prevent any transactions connected with this Agreement.
3. There is no legal action or suit pending against any party, to the knowledge of the Purchaser, that would materially affect this Agreement.
Closing
The closing of the purchase and sale of the Shares (the "Closing") will take place on March 28, 2023 (the "Closing Date") at the offices of the Seller or at such other time and place as the Seller and the Purchaser mutually agree. At Closing and upon the Purchaser paying the Purchase Price in full to the Seller, the Seller will deliver to the Purchaser duly executed transfers of the Shares.
Expenses
All parties agree to pay all their own costs and expenses in connection with this Agreement.
Finder's Fees
No party to this Agreement will pay any type of finder's fee to any other party to this Agreement or to any other individual in connection to this Agreement.
All parties to this Agreement warrant and represent that no investment banker or broker or other intermediary has facilitated the transaction contemplated by this Agreement and is entitled to a fee or commission in connection with said transaction. All parties to this Agreement indemnify and hold harmless all other parties to this Agreement in connection with any claims for brokerage fees or other commissions that may be made by any party pertaining to this Agreement.
Dividends
Any dividends earned by the Shares and payable before the Closing of this Agreement will belong to the Seller, and any dividends earned by the Shares and payable after the Closing of this Agreement will belong to the Purchaser.
Any rights to vote attached to the Shares will belong to the Seller before the Closing and will belong to the Purchaser after the Closing.
Governing Law
The Purchaser and the Seller submit to the jurisdiction of the courts of the Province of for the enforcement of this Agreement or any arbitration award or decision arising from this Agreement. This Agreement will be enforced or construed according to the laws of the Province of .
Miscellaneous
Time is of the essence in this Agreement.
This Agreement may be executed in counterparts. Facsimile signatures are binding and are considered to be original signatures.
All warranties and representations of the Seller and the Purchaser connected with this Agreement will survive the Closing.
This Agreement will not be assigned either in whole or in part by any party to this Agreement without the written consent of the other party.
Headings are inserted for the convenience of the parties only and are not to be considered when interpreting this Agreement. Words in the singular mean and include the plural and vice versa. Words in the masculine gender include the feminine gender and vice versa. Words in the neuter gender include the masculine gender and the feminine gender and vice versa.
If any term, covenant, condition or provision of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, it is the parties' intent that such provision be reduced in scope by the court only to the extent deemed necessary by that court to render the provision reasonable and enforceable and the remainder of the provisions of this Agreement will in no way be affected, impaired or invalidated as a result.
This Agreement contains the entire agreement between the parties. All negotiations and understandings have been included in this Agreement. Statements or representations which may have been made by any party to this Agreement in the negotiation stages of this Agreement may in some way be inconsistent with this final written Agreement. All such statements are declared to be of no value in this Agreement. Only the written terms of this Agreement will bind the parties.
This Agreement and the terms and conditions contained in this Agreement apply to and are binding upon the Seller and the Purchaser and their respective successors, assigns, executors, administrators, beneficiaries, and representatives.
Any notices or delivery required here will be deemed completed when hand-delivered, delivered by agent, or seven (7) days after being placed in the post, postage prepaid, to the parties at the addresses contained in this Agreement or as the parties may later designate in writing.
All of the rights, remedies and benefits provided by this Agreement will be cumulative and will not be exclusive of any other such rights, remedies and benefits allowed by law.

IN WITNESS WHEREOF the Seller and Purchaser have duly affixed their signatures under hand and seal on this ________ day of ________________, ________.