{"id":14062,"date":"2020-10-12T18:19:32","date_gmt":"2020-10-12T12:49:32","guid":{"rendered":"https:\/\/swaritadvisors.com\/learning\/?p=14062"},"modified":"2020-10-20T17:39:11","modified_gmt":"2020-10-20T12:09:11","slug":"format-of-share-purchase-agreement","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/learning\/format-of-share-purchase-agreement\/","title":{"rendered":"Format of Share Purchase Agreement: Its Concept and Clauses"},"content":{"rendered":"\n<p class=\"has-drop-cap\">The term \u201c<em>Format of Share Purchase Agreement<\/em>\u201d denotes a <em>formal legal document<\/em> that lays down the <em>terms and conditions<\/em> for the <em>seller and buyer<\/em> of shares. That mean, through this <em>document,<\/em> the <em>buyer steps into the shoes of the seller<\/em>.<\/p>\n\n\n\n<p>Further, it shall be pertinent to note that a <span style=\"text-decoration: underline;\"><strong><a href=\"https:\/\/swaritadvisors.com\/share-purchase-agreement\">Share Purchase Agreement<\/a><\/strong><\/span> will include both <em>Share <\/em>and its <em>Price<\/em>.<\/p>\n\n\n\n<p>In this blog, we will discuss the concept of <em>Format of Share Purchase Agreement<\/em>, together with its <em>Concept<\/em> and <em>Clauses<\/em>.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a54c53bb640d\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a54c53bb640d\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/learning\/format-of-share-purchase-agreement\/#Concept_of_Share_Purchase_Agreement\" title=\"Concept of Share Purchase Agreement\">Concept of Share Purchase Agreement<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/learning\/format-of-share-purchase-agreement\/#Need_for_Format_of_Share_Purchase_Agreement\" title=\"Need for Format of Share Purchase Agreement\">Need for Format of Share Purchase Agreement<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/learning\/format-of-share-purchase-agreement\/#Elements_of_an_SPA\" title=\"Elements of an SPA\">Elements of an SPA<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/learning\/format-of-share-purchase-agreement\/#Benefits_of_Share_Purchase_Agreement\" title=\"Benefits\nof Share Purchase Agreement\">Benefits\nof Share Purchase Agreement<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/learning\/format-of-share-purchase-agreement\/#Reasons_to_Choose_Share_Purchase_Agreement\" title=\"Reasons to Choose Share Purchase Agreement\">Reasons to Choose Share Purchase Agreement<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/learning\/format-of-share-purchase-agreement\/#Significance_of_the_Share_Purchase_Agreement\" title=\"Significance of the Share Purchase Agreement\">Significance of the Share Purchase Agreement<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/swaritadvisors.com\/learning\/format-of-share-purchase-agreement\/#Clauses_of_a_Share_Purchase_Agreement\" title=\"Clauses of a Share Purchase Agreement\">Clauses of a Share Purchase Agreement<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/swaritadvisors.com\/learning\/format-of-share-purchase-agreement\/#Parties\" title=\"Parties\">Parties<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/swaritadvisors.com\/learning\/format-of-share-purchase-agreement\/#Recitals\" title=\"Recitals\">Recitals<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/swaritadvisors.com\/learning\/format-of-share-purchase-agreement\/#Definitions_and_Interpretations\" title=\"Definitions and Interpretations\">Definitions and Interpretations<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/swaritadvisors.com\/learning\/format-of-share-purchase-agreement\/#Consideration_for_Sale_of_Shares\" title=\"Consideration for Sale of Shares\">Consideration for Sale of Shares<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/swaritadvisors.com\/learning\/format-of-share-purchase-agreement\/#Condition_Precedent\" title=\"Condition Precedent\">Condition Precedent<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/swaritadvisors.com\/learning\/format-of-share-purchase-agreement\/#Closing_Clause\" title=\"Closing Clause\">Closing Clause<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/swaritadvisors.com\/learning\/format-of-share-purchase-agreement\/#Covenant_by_the_Parties\" title=\"Covenant by the Parties\">Covenant by the Parties<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/swaritadvisors.com\/learning\/format-of-share-purchase-agreement\/#Conditions_Subsequent\" title=\"Conditions Subsequent\">Conditions Subsequent<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/swaritadvisors.com\/learning\/format-of-share-purchase-agreement\/#Representations_and_Warranties_by_Seller\" title=\"Representations and Warranties by Seller\">Representations and Warranties by Seller<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/swaritadvisors.com\/learning\/format-of-share-purchase-agreement\/#Representations_and_Warranties_by_Buyer\" title=\"Representations and Warranties by Buyer\">Representations and Warranties by Buyer<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/swaritadvisors.com\/learning\/format-of-share-purchase-agreement\/#Confidentiality\" title=\"Confidentiality\">Confidentiality<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/swaritadvisors.com\/learning\/format-of-share-purchase-agreement\/#Indemnification\" title=\"Indemnification\">Indemnification<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/swaritadvisors.com\/learning\/format-of-share-purchase-agreement\/#Notice\" title=\"Notice\">Notice<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-21\" href=\"https:\/\/swaritadvisors.com\/learning\/format-of-share-purchase-agreement\/#Force_Majeure\" title=\"Force Majeure\">Force Majeure<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-22\" href=\"https:\/\/swaritadvisors.com\/learning\/format-of-share-purchase-agreement\/#Resolution_of_Dispute_and_Arbitration\" title=\"Resolution of Dispute and Arbitration\">Resolution of Dispute and Arbitration<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-23\" href=\"https:\/\/swaritadvisors.com\/learning\/format-of-share-purchase-agreement\/#Jurisdiction\" title=\"Jurisdiction\">Jurisdiction<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-24\" href=\"https:\/\/swaritadvisors.com\/learning\/format-of-share-purchase-agreement\/#Termination\" title=\"Termination \">Termination <\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-25\" href=\"https:\/\/swaritadvisors.com\/learning\/format-of-share-purchase-agreement\/#Common_Mistakes_While_Drafting_the_Format_of_Share_Purchase_Agreement\" title=\"Common Mistakes While Drafting the Format of Share Purchase\nAgreement\">Common Mistakes While Drafting the Format of Share Purchase\nAgreement<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-26\" href=\"https:\/\/swaritadvisors.com\/learning\/format-of-share-purchase-agreement\/#Procedure_for_Drafting_the_Format_of_Share_Purchase_Agreement\" title=\"Procedure for Drafting the Format of Share Purchase Agreement\">Procedure for Drafting the Format of Share Purchase Agreement<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-27\" href=\"https:\/\/swaritadvisors.com\/learning\/format-of-share-purchase-agreement\/#Difference_Between_Asset_Purchase_and_Share_Purchase\" title=\"Difference Between Asset Purchase and Share Purchase\">Difference Between Asset Purchase and Share Purchase<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-28\" href=\"https:\/\/swaritadvisors.com\/learning\/format-of-share-purchase-agreement\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-29\" href=\"https:\/\/swaritadvisors.com\/learning\/format-of-share-purchase-agreement\/#Sample_Format_of_Share_Purchase_Agreement\" title=\"Sample Format of Share Purchase Agreement\">Sample Format of Share Purchase Agreement<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Concept_of_Share_Purchase_Agreement\"><\/span>Concept of Share Purchase Agreement<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The term \u201c<em>Share Purchase Agreement<\/em>\u201d means a <em>legally binding<\/em> <em>agreement<\/em> which includes all the <em>terms and conditions<\/em> regarding the <em>Sale and Purchase<\/em> of shares. Further, the <em>main aim<\/em> of this <em>document<\/em> is to <em>ease out the process<\/em> of <em>transferring the ownership<\/em> of <em>shares of a company<\/em>.<\/p>\n\n\n\n<p>The <em>parties involved<\/em> in the agreement are known as <em>Buyer<\/em> and <em>Seller<\/em>. Under this agreement, the <em>seller<\/em> decides to <em>sell<\/em> his\/ her <em>some shares<\/em> to the <em>buyer<\/em> at a <em>specific price rate<\/em>. &nbsp;Also, the parties involved needs to <em>sign the document<\/em> to <em>complete<\/em> the process of <em>transferring shares<\/em>.<\/p>\n\n\n\n<p>Moreover, it shall be pertinent to note that a <em>Share Purchase Agreement<\/em> or SPA is normally used by the <em>parties<\/em> when <em>transferring <\/em>a<em> large number of items<\/em>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Need_for_Format_of_Share_Purchase_Agreement\"><\/span>Need for Format of Share Purchase Agreement<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A\nShare Purchase Agreement or SPA is used when an entity or an individual is\nselling or purchasing the shares in the company with some other person or\norganisation.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Elements_of_an_SPA\"><\/span>Elements of an SPA<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" loading=\"lazy\" width=\"1000\" height=\"385\" src=\"https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/10\/Elements-of-an-SPA-Heading.jpg\" alt=\"SPA Elements\" class=\"wp-image-14064\" srcset=\"https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/10\/Elements-of-an-SPA-Heading.jpg 1000w, https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/10\/Elements-of-an-SPA-Heading-300x116.jpg 300w, https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/10\/Elements-of-an-SPA-Heading-768x296.jpg 768w\" sizes=\"(max-width: 1000px) 100vw, 1000px\" \/><\/figure>\n\n\n\n<p>The <strong><em>elements of a Share Purchase Agreement<\/em><\/strong>\nare as follows:<\/p>\n\n\n\n<ol><li>Name of the Company;&nbsp;<\/li><li>Name of the Purchaser;<\/li><li>Value Per Share;<\/li><li>Warranties and Representations;<\/li><li>Number of Shares sold;<\/li><li>Agreement of Indemnification;<\/li><li>Place of Transaction;<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Benefits_of_Share_Purchase_Agreement\"><\/span>Benefits\nof Share Purchase Agreement<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The <strong><em>benefits <\/em><\/strong>of the <strong><em>Format of Share Purchase\nAgreement<\/em><\/strong> can be summarised as:<\/p>\n\n\n\n<ol><li>A Share Purchase Agreement or SPA being formally executed for the sale of shares makes the transaction legally correct and organized by evidently specifying the expectations of the parties involved;<\/li><li>An SPA is a detailed document that covers all the ambits involved in the transaction of sale and purchase of a share. That means it reduces the possibility of confusion and makes the transaction unambiguous;<\/li><li>It assists the companies in maintaining a record of the <strong><span style=\"text-decoration: underline;\"><a href=\"https:\/\/swaritadvisors.com\/shareholders-agreement\">shareholder&#8217;s agreement<\/a><\/span><\/strong> and involves them in the processes of decision making as well;<\/li><li>Such an agreement helps the regulatory authority to keep check of similar transactions and enforce them;<\/li><li>An SPA protects and safeguards the rights and interests of both the parties and minimizes the risk of getting conned as well;<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Reasons_to_Choose_Share_Purchase_Agreement\"><\/span>Reasons to Choose Share Purchase Agreement<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/10\/Reasons-to-Choose-Share-Purchase-Agreement-heading.jpg\" alt=\"Choose SPA\" class=\"wp-image-14066\" width=\"475\" height=\"333\" srcset=\"https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/10\/Reasons-to-Choose-Share-Purchase-Agreement-heading.jpg 1000w, https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/10\/Reasons-to-Choose-Share-Purchase-Agreement-heading-300x211.jpg 300w, https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/10\/Reasons-to-Choose-Share-Purchase-Agreement-heading-768x539.jpg 768w\" sizes=\"(max-width: 475px) 100vw, 475px\" \/><\/figure><\/div>\n\n\n\n<p>The <em>reasons to choose the Format of Share Purchase Agreement<\/em> are as follows:<\/p>\n\n\n\n<ol><li>It is a Legally Binding\nDocument;<\/li><li>It increases the\npossibility of Revenue through Business;<\/li><li>Allows Seller\nand Purchase to take a Final Decision before signing it;<\/li><li>Offers Tax\nBenefit;<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Significance_of_the_Share_Purchase_Agreement\"><\/span>Significance of the Share Purchase Agreement<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/10\/Significance-of-the-Share-Purchase-Agreement-heading.jpg\" alt=\"SPA Significance\" class=\"wp-image-14067\" width=\"490\" height=\"326\" srcset=\"https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/10\/Significance-of-the-Share-Purchase-Agreement-heading.jpg 1000w, https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/10\/Significance-of-the-Share-Purchase-Agreement-heading-300x200.jpg 300w, https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/10\/Significance-of-the-Share-Purchase-Agreement-heading-768x511.jpg 768w\" sizes=\"(max-width: 490px) 100vw, 490px\" \/><\/figure><\/div>\n\n\n\n<p>The <em>significance of the Format of Share Purchase Agreement<\/em> can be summarised as:<\/p>\n\n\n\n<ol><li>It is a legally\nbinding document;<\/li><li>Reduces the\nchances of misunderstanding and disputes;<\/li><li>It acts as the\nLegal Evidence for the Purchaser;<\/li><li>Provides details\nregarding the Transfer of Shares;<\/li><li>Includes Dispute\nResolution Form as a prefix;<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Clauses_of_a_Share_Purchase_Agreement\"><\/span>Clauses of a Share Purchase Agreement<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" loading=\"lazy\" width=\"1000\" height=\"733\" src=\"https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/10\/Clauses-of-a-Share-Purchase-Agreement-heading.jpg\" alt=\"SPA Clauses\" class=\"wp-image-14068\" srcset=\"https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/10\/Clauses-of-a-Share-Purchase-Agreement-heading.jpg 1000w, https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/10\/Clauses-of-a-Share-Purchase-Agreement-heading-300x220.jpg 300w, https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/10\/Clauses-of-a-Share-Purchase-Agreement-heading-768x563.jpg 768w\" sizes=\"(max-width: 1000px) 100vw, 1000px\" \/><\/figure>\n\n\n\n<p>The <em>clauses of the Format of Share Purchase Agreement<\/em> are as follows:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Parties\"><\/span>Parties<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In a Share Purchase Agreement, the parties involved\nare known as Seller and Purchaser.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Recitals\"><\/span>Recitals<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The term \u201cRecitals\u201d means that the factual\nbackground, consideration, objectives, roles of the parties involved must be\nclearly defined.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Definitions_and_Interpretations\"><\/span>Definitions and Interpretations<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The term \u201cdefinition\u201d means that\nthe words used in the agreement must be clearly defined regarding their meaning\nand use. Further, the term \u201cinterpretation\u201d means that the terms used must be\ninterpreted in the same way as stated. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Consideration_for_Sale_of_Shares\"><\/span>Consideration for Sale of Shares<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>This clause deals with the Payment\nStructure involved in the transaction. Further, the term \u201cPayment Structure\u201d\nincludes the particular as follows:<\/p>\n\n\n\n<ol><li>Closing\nBalance;<\/li><li>Deposits\nGiven;<\/li><li>Amount\nto be Set-off;<\/li><li>Warranties,\netc.;<\/li><\/ol>\n\n\n\n<p>Moreover, it shall be relevant to\nnote that the buyer can either make a one-time payment or can pay the same in\ninstallments. However, all these details must be mentioned in the consideration\nclause.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Condition_Precedent\"><\/span>Condition Precedent<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The term \u201cCondition Precedent\u201d denotes a clause that\nincludes the details of the person accountable for authorisation, permits, and\npermissions. Further, it shall comprise of details regarding Representations,\nObligations, Warranties, and Execution of Agreement as well.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Closing_Clause\"><\/span>Closing Clause<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>All the significant details, such\nas time, place, and manner in which the closing shall take place are included\nunder this clause.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Covenant_by_the_Parties\"><\/span>Covenant by the Parties<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The term \u201ccovenant by the parties\u201d\ndenotes the conditions that are mutually accommodated by the parties. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conditions_Subsequent\"><\/span>Conditions Subsequent<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>This clause is used only in the\ncase of breach of a condition to safeguard the rights of a subsequent purchaser.\n<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Representations_and_Warranties_by_Seller\"><\/span>Representations and Warranties by Seller<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The term Representations and\nWarranties by Seller includes the particulars as follows:<\/p>\n\n\n\n<ol><li>Number\nof Shares owned by them;<\/li><li>List\nof the Directors;<\/li><li>Transparency\nof Accounts;<\/li><li>Pending\nDisputes;<\/li><li>Loan\nDetails;<\/li><\/ol>\n\n\n\n<p>Thus, all the details regarding the\nvendor\u2019s right to sell his\/ her share to the purchaser are covered under this\nclause.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Representations_and_Warranties_by_Buyer\"><\/span>Representations and Warranties by Buyer<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>This clause works the same as the seller\u2019s clause\nand safeguards the rights and interest of the buyer.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Confidentiality\"><\/span>Confidentiality<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>It is one of the significant\nclauses of a share purchase agreement. Under this clause, the parties need to\nshare the confidential information of their companies. That means this clause\nassists in sealing the price sensitive information. <\/p>\n\n\n\n<p>Further, the term \u201cPrice Sensitive\nInformation\u201d denotes the details that cannot be revealed without the Mutual\nConsent of the parties involved. <\/p>\n\n\n\n<p>Also, the Clause of Confidentiality\nis usually kept time-barred from 18 months to 2 years.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Indemnification\"><\/span>Indemnification<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>This\nclause of the Share Purchase Agreement deals with the claim amount, time limit, procedure, and the subject matter.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Notice\"><\/span>Notice<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The Notice Clause includes the\ndetails, such as the location of the parties, date of dispatch, etc. Further,\nthe form and the format of acceptance must be disclosed in this clause as well.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Force_Majeure\"><\/span>Force Majeure<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>These types of clauses act as a\nresort in the unforeseen crises and strengthen the parties involved in the\nshare purchase agreement. Further, this clause works as a measure for the\nfinancial crisis and fluctuating market.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Resolution_of_Dispute_and_Arbitration\"><\/span>Resolution of Dispute and Arbitration<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>This clause explicitly contains all\nthe details regarding the Seat of Arbitration Language, Arbitrators Name, and\nNumber of Arbitrators.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Jurisdiction\"><\/span>Jurisdiction<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A Share Purchase Agreement will be\nbased on Indian laws. Further, the city in which the buyer resides will have\nthe jurisdiction of the court. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Termination\"><\/span>Termination <span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>This clause will include all the details as to how a\ncontract will be terminated.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Common_Mistakes_While_Drafting_the_Format_of_Share_Purchase_Agreement\"><\/span>Common Mistakes While Drafting the Format of Share Purchase\nAgreement<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The <em>common mistakes<\/em> while <em>drafting the format of Share Purchase Agreement<\/em> are as follows:<\/p>\n\n\n\n<ol><li>Considering any template for the Share Purchase Agreement;<\/li><li>Executing the agreement without any prior knowledge and\nexperience;<\/li><li>Not Consulting any Legal Expert Opinion;<\/li><li>Not knowing the Tax Implications;<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Procedure_for_Drafting_the_Format_of_Share_Purchase_Agreement\"><\/span>Procedure for Drafting the Format of Share Purchase Agreement<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The <em>steps involved<\/em> in the <em>process to draft the format of Share Purchase Agreement<\/em> are as follows:<\/p>\n\n\n\n<ol><li>Reach out to Swarit Advisors, our experienced lawyers will get in touch with you and will assist you in the process of drafting and other requirements of a Share Purchase Agreement;<\/li><li>After deciding the aims and objectives, our lawyer will draft a Sample Format of Share Purchase Agreement based on your needs;<\/li><li>After that, we will send the sample <span style=\"text-decoration: underline;\">Share Purchase Agreement<\/span><sup><a href=\"https:\/\/www.sec.gov\/Archives\/edgar\/data\/1499781\/000119312512480728\/d443768dex99f.htm\"><strong><em>[1]<\/em><\/strong><\/a><\/sup> to you for review purpose;<\/li><li>The whole process will take around 3 to 4 days to complete;<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Difference_Between_Asset_Purchase_and_Share_Purchase\"><\/span>Difference Between Asset Purchase and Share Purchase<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The term \u201cshare purchase\u201d\ndenotes that an individual or entity will have the ownership in a company.\nHowever, the term \u201casset purchase\u201d denotes the sale of the assets and\nliabilities of the company. Further, the term assets include Goodwill,\nIntellectual Property, and Machinery. <\/p>\n\n\n\n<p>Also, it shall be relevant\nto note that an individual will lose the ownership in Share Purchase but will\nretain the same in Asset Purchase.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In a nutshell, the Format of Share Purchase\nAgreement acts as a formal legal document that lays down the terms and\nconditions for both the seller and buyer of shares. Further, through this\ndocument, the buyer steps into the shoes of the seller.<\/p>\n\n\n\n<p>However, drafting a Share Purchase Agreement is a time-consuming task and requires prior experience as well. At Swarit Advisors, our professionals will cater all your needs and will make draft the Share purchase Agreement based on your requirements.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Sample_Format_of_Share_Purchase_Agreement\"><\/span>Sample Format of Share Purchase Agreement<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n<a href=\"https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/10\/SHARE-PURCHASE-AGREEMENT.pdf\" class=\"pdfemb-viewer\" style=\"\" data-width=\"max\" data-height=\"max\"  data-toolbar=\"bottom\" data-toolbar-fixed=\"off\">SHARE-PURCHASE-AGREEMENT<br\/><\/a>\n<p class=\"wp-block-pdfemb-pdf-embedder-viewer\"><\/p>\n\n\n\n<p><b>Also, Read:<\/b> <mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/learning\/rental-agreement-a-guide-on-residential-agreement-format\/\n\">A complete Guide on Residential Rental Agreement Format<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The term \u201cFormat of Share Purchase Agreement\u201d denotes a formal legal document that lays down the terms and conditions for the seller and buyer of shares. That mean, through this document, the buyer steps into the shoes of the seller. Further, it shall be pertinent to note that a Share Purchase Agreement will include both [&hellip;]<\/p>\n","protected":false},"author":17,"featured_media":14076,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[615],"tags":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/14062"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/users\/17"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/comments?post=14062"}],"version-history":[{"count":11,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/14062\/revisions"}],"predecessor-version":[{"id":14482,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/14062\/revisions\/14482"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media\/14076"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media?parent=14062"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/categories?post=14062"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/tags?post=14062"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}