What is Share Purchase Agreement?
The Share Purchase Agreement is an agreement which finalizes all terms and conditions related to the purchase and sale of the shares of a company. It are an agreement between parties where the seller agrees to sell the stated number of shares to the buyer at a particular price. The main aim of this document is to prove that the terms of the agreement were mutually agreed between the parties.
SPA specifies the consideration and the number of shares to be sold, with the conditions precedent and covenants by the parties. On the basis of this agreement, shares will be allotted.
SPA covers the following aspects such as providing the definition of all the major terms used in the agreement. It provides that all the statements that the seller & buyer are signing off to be true. It also provides dispute resolution mechanism. It will also specify any special tax treatment that either the seller or the buyer may be entitled to.
Benefits of Share Purchase Agreement
Here are the following benefits of share purchase agreement
- In the absence of SPA, there can be several undesirable consequences. While many businesses take a casual approach to such matters.
- With the help of this document, it provides an opportunity to protect the interest of parties before the shares are transferred. It covers every aspect of the transaction and it is important for both the parties to examine each clause covered in the document and understand its meaning.
- With the help of this document, it provides an opportunity to protect the interest of parties before the shares are transferred. It covers every aspect of the transaction and it is important for both the parties to examine each clause covered in the document and understand its meaning.
