Overview of Share Purchase Agreement


What is this document?

A Share Purchase Agreement is an agreement for the sale/purchase of shares.


When would I use this document?

A Share Purchase Agreement is used when shares are sold by a person other than a corporation issuing its own shares. If a corporation is issuing its own shares, a Subscription Agreement is used.


Who Signs this Agreement?

The seller(s) and purchaser(s) of the shares will sign the agreement. The corporation that issued the shares will sign as “corporation”.


More details about this document

Share Purchase Agreements can vary widely in length, depending on the number of parties to the agreement, the number and types of shares being sold, the complexity of the deal, and the number of representations and warranties included in the agreement.

The agreement will define the parties, the shares to be sold (issuing company, number and class of shares), the purchase price, the timing and method(s) of payment, and the closing date. The agreement will contain a number of representations and warranties, including the seller’s right to transfer ownership in the shares, and the buyer’s binding obligation to pay for the shares. The agreement will also include a clause dealing with closing deliveries, which lists the payments/items/documents which each party must provide upon the closing of the transaction.

The agreement can also include clauses which deal with the purchaser’s obligations and rights as a shareholder of the corporation eg. the obligation to be bound by any shareholders’ agreement.


What are the core elements of this document?

The core elements of a Share Purchase Agreement include: Shares, Purchase Price, Payment, Closing Deliveries, Closing Date, Representations and Warranties.

The Share Purchase Agreement may also contain clauses dealing with Confidentiality, Non-Competition, Non-Solicitation, and Deposit.


Related Documents

Promissory Note – a written promise to pay used to provide security for payment

Term Sheet – a document that sets out the basic elements of the transaction or investment

Nondisclosure/Confidentiality Agreement – an agreement that protects confidential information

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).

Shareholders’ Resolution – in privately held companies a resolution of the shareholders approving the sale of the shares might be required

Directors’ Resolution – if the corporation that issued the shares is a party to the share purchase agreement the agreement will need to be ratified by the directors of the corporation

Minute Book – this is where the corporate records are kept. A copy of the share purchase agreement can be kept in the minute book of the corporation that issued the shares sold under the agreement

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

Resignation, Release and Waiver – a document signed by a person resigning from a position eg. as a director who may also sell their shares, and releasing the corporation from all claims

Subscription Agreement – an agreement for the purchase of shares between a person buying shares and the corporation issuing the shares


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