Free Share Purchase Agreement

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Share Purchase Agreement

Additional Clauses


Additional Clauses



Frequently Asked Questions
When should I include an additional clause?Include an additional clause if you wish to include terms that are not already addressed in any of the previous questions.Write using language that is simple and conveys ideas with the greatest possible clarity and avoids using legalese.

Legalistic StylePlain English
at the present time now
due to the fact that because; since
during such time aswhile
for the duration ofduring
inasmuch asbecause; since
in the event thatif
notwithstanding the fact that although; even if
prior to before
pursuant to under; in accordance with
subsequent toafter
that certaina
with reference toabout

Do not use several names or words to refer to the same person or thing as it could cause confusion and ambiguity by appearing to introduce new or different people or items.

Certain words were capitalized and defined already in this Agreement. For example, a seller is called the "Seller". Use the same predefined terms in your additional clauses.

Do not use pronouns such as: they, us, we, our, you, or me. Pronouns may be ambiguous and can cause confusion.

Do not abbreviate words.

Use numerals, not words, to denote amounts.

Try not to repeat or contradict what has already been stated in the Agreement.

Only put one paragraph per additional clause and order your additional clauses in a logical sequence.


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:

  1. The Seller is the owner of record of 1 ____________________ share (the "Share") of  ____________________  (the "Corporation").
  2. 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:

  1. Purchase and Sale
  2. Except as otherwise provided in this Agreement, all monetary amounts referred to in this Agreement are in USD (US Dollars).
  3. 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").
  4. A fixed sum of $___________ will be payable on closing of this Agreement.
  5. All payments will be in the form of certified check, 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.
  6. Representations and Warranties of the Seller
  7. 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.
  8. Representations and Warranties of the Purchaser
  9. 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.
  10. Closing
  11. The closing of the purchase and sale of the Shares (the "Closing") will take place on ________________ ____, ________ (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.
  12. Expenses
  13. All parties agree to pay all their own costs and expenses in connection with this Agreement.
  14. Finder's Fees
  15. 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.
  16. 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.
  17. Dividends
  18. 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.
  19. 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.
  20. Governing Law
  21. The Purchaser and the Seller submit to the jurisdiction of the courts of the Commonwealth of Virginia 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 Commonwealth of Virginia.
  22. Miscellaneous
  23. Time is of the essence in this Agreement.
  24. This Agreement may be executed in counterparts.  Facsimile signatures are binding and are considered to be original signatures.
  25. All warranties and representations of the Seller and the Purchaser connected with this Agreement will survive the Closing.
  26. 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.
  27. 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.
  28. 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.
  29. 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.
  30. 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.
  31. 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.
  32. 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 ____________, _________.

SIGNED, SEALED, AND DELIVERED

   

in the presence of:

 

____________________ (Seller)

     

Witness: ______________________ (Sign)

 

Per:_________________________ (SEAL)

Witness Name: ______________________

   


SIGNED, SEALED, AND DELIVERED

   

in the presence of:

 

____________________ (Purchaser)

     

Witness: ______________________ (Sign)

 

Per:_________________________ (SEAL)

Witness Name: ______________________

   

Last Updated March 21, 2024

Written by 

Reviewed by 


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Fact checked by 



What is a Share Purchase Agreement (SPA)?

A Share Purchase Agreement is a legal contract between a buyer and a seller of company shares. This agreement transfers ownership of the corporation’s shares (also known as stock) and outlines the sale terms. 

For investors, Share Purchase Agreements are important because they outline the details of a stock deal. For company owners, SPAs are a great way to generate revenue without taking their company public. 

A Share Purchase Agreement is also known as a:

  • Stock purchase agreement
  • Stock purchase contract
  • Share sale agreement

How does a Share Purchase Agreement work?

A Share Purchase Agreement transfers ownership of shares from a seller to a buyer. Crucially, this document is used whenever an individual or corporation sells or purchases existing shares in a company.

In this way, a Share Purchase Agreement differs from a Share Subscription Agreement, which is used when new shares are purchased from a corporation. It also differs from a Share Repurchase Agreement, which a corporation uses to repurchase shares from one of its shareholders.

A Share Purchase Agreement outlines the terms and conditions of the sale. It lists the shares held by the shareholder, which helps determine their ownership percentage in the company. This percentage also determines their dividend rights (i.e., the money that is paid to shareholders as a result of the company’s annual profits). 

Types of Shares 

Shares (or stock) are units of ownership in a company that are divided among shareholders (also called stockholders). In the United States, shares are regulated by several securities laws

The type of shares purchased using a Share Purchase Agreement determines the rights, dividend yields, and percentage of ownership that the purchaser is entitled to. Typically, there are two types of shares:

  • Common shares are the most popular types of shares. With common shares, shareholders own a portion of the company and are entitled to dividends depending on the corporation’s annual profits. Common shares also give shareholders voting rights, which they can use to elect the members of the corporation's board of directors.
  • Preferred shares differ from common shares in two fundamental ways. Firstly, shareholders with preferred shares have priority in receiving dividends. Secondly, preferred shareholders typically do not have voting rights.

It is worth noting that the way a corporation's share classes operate may vary depending on the company's corporate structure. If you are unsure about the specifics of each share class, you can consult the Articles of Incorporation and company records for more information.

Representations and warranties

Share Purchase Agreements also acknowledge the representations and warranties of both the purchaser and the seller. Representations and warranties are a part of many different legal contracts. At their heart, representations and warranties are statements or promises of a fact

Let’s lay it out. By signing the Share Purchase Agreement, the seller promises that:

  • They are not breaking any applicable securities laws or regulations when entering this agreement.
  • Unless indicated otherwise, the shares they are selling can be re-sold by the purchaser in the future.
  • There are no debts, liens, mortgages, or any other financial claims on the shares that would prevent the sale to the purchaser. 
  • There are no legal or financial circumstances that would prevent this sale from going through. 

Similarly, by signing the Share Purchase Agreement, the purchaser promises that:

  • They are not breaking any applicable securities laws or regulations when entering this agreement. 
  • They are not involved in any other agreements that would stop the share purchase. 
  • They are not involved in any current legal action or lawsuit that would prevent the purchase.

Share Purchase Agreement versus Asset Purchase Agreement

Share Purchase Agreements and Asset Purchase Agreements (also known as Business Purchase Agreements) are the primary ways investors become financially involved in a corporation. 

However, these documents have one key difference: an Asset Purchase Agreement is used to sell a company’s individual assets or liabilities. In other words, this document deals with a corporation’s tangible items or intangible resources, such as:

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

Benefits of a Share Purchase Agreement

1. Helps mitigate risk

The “representations and warranties” sections of Share Purchase Agreements are crucial to mitigating any financial or legal risks to the agreement.

By signing the document, both the buyer and the seller legally attest to the current financial and legal standing of their respective parties. If any of these facts are false, a Share Purchase Agreement outlines the framework for addressing and dealing with associated risks. 

2. Increases clarity 

It is always beneficial to have the terms and conditions of a business agreement in writing. By drafting, reviewing, and signing a Share Purchase Agreement, both parties can avoid misunderstandings.

What does a Share Purchase Agreement include?

Share Purchase Agreements typically include:

  • Seller and purchaser details, including names and addresses
  • Share details, including number and class
  • Payment details, including purchase price
  • Closing date
  • Additional clauses, if necessary

Related Documents:

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Share Purchase Agreement

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