When buying all the shares of a company (100% of the shares), it is recommended to use a sales contract instead. The document requires important information, such as the parties to the transaction, the description of the shares, the purchase price (consideration), the guarantees and assurances of the parties, the requirements before and after completion. The class of common shares or preferred shares may affect the shareholder`s share of the company`s profit or the amount he receives in the event of the liquidation of the company, and whether a shareholder has voting shares or not, determines whether the shareholder has the right to vote at general meetings. Companies that offer several types of shares sometimes have a series (class A, class B, class C, etc.) that can be worth different amounts of money. For example, 100 Class A shares may not be the same value as 100 Class B common shares. What distinguishes this document from a share purchase agreement is that a share subscription contract is used in cases where a company sells its shares while, in a share purchase agreement, a shareholder of the company sells shares already issued to another party. The interpretation is covered by the share purchase agreement, which contains definitions of all the terms used in the agreement. The sale and purchase of shares are also listed, covering purchase price adjustments, purchase price and dispute resolution. The guarantees and assurances of the buyer and the seller give all the statements that the buyer and the seller sign and claim to be true. Everything related to employees is also covered, including the terms of their benefits and how the accumulated bonuses are managed. Remember that most companies will have common shares, but not all will have preferred shares. For example, if you and two partner partners are all equally involved in a business and a partner wishes to resign, a share purchase agreement can be used to purchase the affiliate`s shares. The acquisition of shares represents the acquisition of the operational activity of a company.
None of the existing contracts with the company change. When a shareholder sells his shares in a company, he achieves a total rupture of the relationship between him and the activity concerned. However, the buyer will insist on a number of contractual commitments concerning the company (guarantees) that will continue to bind the shareholder after the sale. The number of shares held by a shareholder determines his percentage of the company`s ownership and the payment of dividends for which they are eligible when the company pays dividends. The payment of a dividend is the money paid to shareholders and usually results from a distribution of a company`s annual profit. A share sale agreement is itself a private document and there is no obligation to submit it to Companies House. You should, however, inform Companies House of the change in ownership of shares in the target company`s next annual return.