Share Purchase Agreement Buyer Protection

A spa should indicate the sale price of the shares, the currency paid, the schedule and all other conditions such as the staggered payment related to the company`s delivery. As a general rule, payment is made in cash, although the buyer can sometimes offer the seller some of his own shares or issue credit vouchers to the seller. This will require the involvement of a lawyer. A key document in transactional practice is the share purchase agreement (or SPA). This document contains provisions that govern, among other things, the terms of the transaction, the payment of the price and the financial accounts between the parties, their obligations and responsibilities. This is the main document negotiated between the parties to cover tax issues. In recent years, particularly for transactions with certain countries, PSPs will be accompanied by taxes. A tax deed is a separate document dealing with the tax issues agreed between the buyer and the seller. If part of the purchase price is withheld by the buyer after completion, for example. B to respond to any claims arising from the seller`s guarantees and allowances, this can be transferred to a receiver account with a third party such as a bank or lawyer. It will be a mechanism for describing fiduciary agreements and when and how the funds will be released. This guarantee confirms that the seller is not interested in a transaction that is in competition with or likely to become competitive with the target company. This is further protected in the share purchase agreement by the use of restrictive agreements.

At the beginning of the GSO, the identity of the seller and buyer, including their addresses and your statutory headquarters, is described if it is a company or other legal body. If the business is owned by more than one shareholder, it is important for the buyer to ensure that each seller is responsible for the total amount of debt (joint and several liability) or, if not, as the distribution of liability is distributed among the individual sellers. The terms “guarantees” “representations” and allowances are often used when selling assets or selling shares. A target company subject to a share purchase agreement cannot be insolvent, i.e. not pay its debts. For a share purchase transaction to take place, the target company must be properly and in good condition. This means that the company must be officially recognized by Companies House. Being “in good reputation” means that the company has continued to exist since its inception. Since the sale of shares is subject to the general rule of “careful buyers,” the law does not offer much protection to the buyer if unexpected debts or problems are brought to light after the sale of the business. In order to protect the buyer from such unforeseen costs, a DSG contains extensive guarantees from the seller, in which it provides statements and commitments on the state of the business and assets of the business, and possibly compensation in favour of the buyer allowing him to recover any losses incurred by the seller. The execution of the SPA and completion (when the shares are transferred) is often done, but not always, at the same time. The OSG must describe in detail what happens at the conclusion, for example: a share purchase agreement (SPA) is the main contract used in a private sale of shares.

Given the pace of changes introduced in both Polish and international legislation, the evolution of judicial decisions and inconsistencies in the decisions of the tax authorities, appropriate guarantees and compensation clauses covering the company`s tax accounts should be among the buyer`s priorities when negotiating the SGT`s terms and conditions. Sub-taxes are real money and can seriously affect the profitability of the buyer`s investment.