Share Sale Agreements


A share sale agreement involves the sale of minor or major equity in a company. It is a legally binding contract that outlines the conditions of the sale of shares between the vendor and the purchaser.


  • Share sale agreements have a number of elements that identify the terms and conditions of selling shares. At a minimum, they list the vendor, purchaser and guarantor, purchasing price, the number of shares sold, when the shares come into force, options for additional shares and additional commitments.


  • Share sale agreements can include clauses that protect the purchaser in a breach of contract. A company and a shareholder are separate entities, so any liabilities such as hidden taxes or debts belong solely to the company. The purchaser has no responsibility to help the company overcome such liabilities.


  • Sometimes a vendor will have a previous agreement to sell shares to a third party. If a purchaser buys shares from a seller and then the other party chooses to exercise his option to buy, the purchaser may have to sell his shares to the third party, even if he has a share sale agreement.

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