Overview of Share Buyback Notice

 

What is this document?

A Share Buyback Notice is a notice to a corporation that a shareholder is transferring shares of the corporation to the corporation for a stated price (the share buyback amount) under a Share Buyback Agreement. It is also an acknowledgement and receipt that the payment of the share buyback amount has been made in full.

 

When would I use this document?

If the buyback rights under a Share Buyback Agreement have been triggered and the corporation wishes to exercise its rights to buy back the shares, the corporation would send this notice, along with a mechanism for payment, to the shareholder who is required to sell the shares back to the corporation.

 

Who Signs this Agreement?

This agreement is signed by authorized representatives of the corporation and the shareholder/transferor.

 

More details about this document

While the document is drafted as if the shareholder is initiating the process of selling its shares back to the corporation, it is usually the corporation that would trigger this process. Under a Share Buyback Agreement, a corporation can have the right (but not necessarily the obligation) to buy back its shares from a shareholder if various triggering events occur eg. the shareholder terminates its employment with the corporation, or the shareholder dies or becomes bankrupt.

This document contains a transfer of the shares, a power of attorney for the corporation to transfer the shares to itself, and a receipt and acknowledgement that the share buyback amount has been paid to the (former) shareholder.

 

What are the core elements of this document?

The core elements include a Notice, Transfer of Shares, Power of Attorney, and Receipt and Acknowledgement of Payment.

 

Related Documents

Share Buyback Agreement – an agreement between a shareholder and the corporation giving the right to the corporation to ‘buy back’ the shareholder’s shares under certain conditions eg. the shareholder is no longer an employee

Directors’ Resolution – major decisions (or other decisions as required in a shareholders’ agreement) will need to be ratified by the directors of the corporation

Shareholders’ Resolution –  a resolution by the shareholders approving a transaction or decision, or electing directors

Nondisclosure/Confidentiality Agreement – an agreement that protects confidential information

Receipt of Payment and Release of Obligations – once final payment has been made for the shares the seller can sign this document acknowledging full payment and releasing the purchaser from claims by the seller

Shareholders’ Agreement – an agreement among shareholders dealing with how the corporation will be governed, shareholder rights etc. The share purchase agreement will usually require the purchaser of the shares to sign the shareholders’ agreement (if there is one).

 

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