What Net Lawman says about this template:
"It is usually the buyer who prepares the agreement for the purchase of shares in a company. The reason is that he or she bears most risk and can choose on what conditions the transaction occurs.
But because there is great advantage for the seller in presenting the first version, we have included provisions that benefit both sides. Our notes guide you as to which ones strengthen your position and which ones favour the other side.
This document is likely to be used by an external third party (human or corporate) to buy the shares of an existing shareholder.
Strong protection for the buyer
The document provides the same high level of protection to the buyer that you would expect for the sale of a whole company including a choice of 140 warranties, a penalty payback provision if net profit is less than a certain agreed sum, and limited warranties from remaining shareholders.
Advantage for the seller
The document can also be used by a seller, either to produce an agreement that doesn’t favour the buyer as strongly, or as a guidance document to understand what might be seen as fair and reasonable compared to the document now presented by the buyer or his solicitors.
The agreement provides the framework to protect the interests of the selling shareholders to the extent that you choose. For example, there is an option to include a guarantor and an option for one of the selling shareholders to be a trustee (as a trustee, he cannot give full warranties). If the seller doesn’t present the agreement to the purchaser, he may still wish to include such clauses in the buyer’s document.
A warranty is a promise that something is as it is described, and which, if untrue, can allow the side relying on that information to seek compensation.
This document differs from many other share sale agreement templates in the number of warranties included.
Warranties are important for two reasons.
The first is that they protect the purchaser, who does not have the same information as the seller about the state (and value) of the company.
The second is that they can improve the buyer’s position. Because it is normal practice for buyers to demand warranties, sellers often give them without being sure about whether the situation is as warranted. Buyers can take advantage by asking for more warranties than they might need, and later seeking compensation for those that turn out to be false.
You can read more about how they might be used in this type of transaction.
We provide a very full set of warranties, in plain English so it is easy to choose whether you want each to be given or not. Sellers will, obviously, want to limit those given."
Detailed guidance notes are provided with each template. Net Lawman offers a money back guarantee if the document is not what you need, as well as a legal review option if you want some professional assistance when you are drawing up your documents.
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