7+ Sample Sale of Shares Agreement
What is a Sale of Shares Agreement?
A sale of shares agreement is a document that sells a particular share within the company. This gives the right to the buyer to become a shareholder in the corporation. It means as a shareholder, you will have the right to share the profits of the business. A sale of shares agreement is also called a share purchase agreement or stock purchase agreement. A short-form stock purchase agreement is good for any businessman because they can get a good profit from a business even though they are still new to the business. Sale and purchase of sales are good ways to enter a business.
Even if you are going to enter a simple sale of shares agreement, it can prove that it can give you benefits. To know more about the sale of shares agreement, you can find a free sale of shares agreement template or a simple stock purchase agreement template on the internet. You can find good PDF documents like a good sale of shares agreement PDF or a good share purchase agreement PDF. Any template can be good for you in making a draft sale of shares agreement. By using a sale of shares agreement sample, you will know the clauses that you should include in your sale and purchase of shares agreement.
Benefits of a Sale of Shares Agreement
A report says that 13% of businesses fail because of conflicts between shareholders. If you want to be a shareholder and you want to avoid this to happen in your business, you must be perfectly aware of the sale of shares agreement. Include the right clauses that can protect all the shareholders and the business. Anyway, a sale of shares agreement can solve any conflicts between shareholders. Aside from this, shareholders can also enjoy many benefits. They are the following:
Business Stability: There can be a great benefit when you are going to sell the shares of your business. This is especially true with startups. Not only the startup business partnership agreement will do them well, but also the sale of shares agreement. When you sell your shares, you can share your business with shareholders. They are going to be partners in your business and they are not just going to share profits, but they will also share responsibilities. So, if ever you may experience some challenges in your business, you can have the shareholders to help. If you will need some capital, they can help you. Thus, you can find more stability for your business. Besides, just imagine the money that you can get from selling shares. You can use the money to expand your business. In the end, you can expect more profits from your business. You can always have the shareholders to back you up if ever you can have some problems in your business. This can make your business stable at all times.Good Dispute Resolution: If you are just going to have simple sales agreements in selling your shares, you may neglect many things about your business. Remember, disputes can happen anytime at a time that we may not expect them to happen. We have to be careful and prepared for any disputes that may happen. So, a sale of shares agreement is recommended because it can have all the terms necessary for selling and buying shares. Through the sale of shares agreement, you can have a dispute resolution that can handle everything. You must be wary to take care of your shareholders. Disputes should be avoided at all costs. This is because disputes may destroy your business. They are not simply hassles but they can make your business fail. If you mean to share your business with shareholders, then mean to share it well. Take care of disputes through dispute resolution in the sale of shares agreement. This is the only way that you will have all the necessary measures to handle every dispute. Through dispute resolution, you and the shareholders will know what to do to settle any disputes that may happen. In the end, you can always have a good relationship with all your shareholders.Having Various Privileges: A sale of shares agreement is a good way to give various privileges to the shareholders. Through the written agreement, you can state the rights of the shareholders. You can say the things that they can do in your business. By doing this, you can state all the things that they will have the right to do. Because of this, you can avoid the abuse of power. You can be clear about their responsibilities and all the things that they can share in your business. So, shareholders will have the benefits because you can state in the sale of shares agreements the things that can give them privileges. The agreement is not only meant to tackle a sale but also states their rights when it comes to their shares in your business. By stating the key advantages in the sale of shares agreement, the majority and the minority of shareholders will have accord so you can expect good harmony in your business.Gives Adaptability: A sale of shares agreement can provide adaptability for your business. It will be easy for you to add or remove investors in your corporation through the agreement. Investor agreements may not be enough. You need a sale of shares agreement to be definite on the shares of the company. A sale of shares agreement is a strategic agreement that can help you to handle everything. Through the sale of shares agreement, your business can become flexible. Modification of good management will be given and you will not have the hassles of having unnecessary litigation. By using the agreement, you can outline the relationship of all the shareholders. This way, everyone will know what to do to participate in the business. The clauses of the sale of shares agreement will help you if ever a shareholder will depart or if you want to have a non-compete agreement. Thus, you will not have any difficulties in your relationship with all the shareholders.Having Transfer Restriction: By having a sale of shares agreement, you can control the people who are going to have shares in your business. This is because there are transfer restrictions in the agreement. If you will not have a sale of shares agreement, shareholders can sell their shares to anyone any way they want. This will not be good for your business because you will not know anymore the people with whom you are going to deal with. In any business, we must be careful to choose our investors. We should be careful in participating in any investor contract. We must choose our investors all the time. So, it is a must that we examine every person with whom we are going to have business. Because of this, we cannot let shareholders just sell their shares to anyone we do not know or we do not have the chance to see whether a good person or not. We should take responsibility for our business and we should know every person who is going to enter it. With the sale of shares agreement, you can restrict the people who are going to enter your business. This way, you can protect your organization.Having Clarity: In every business transaction, clarity is important. Selling and buying shares are not simple things. We have to be definite about many things. A sale of shares agreement will help so that you will have the necessary clauses that will make everything clear. Remember, you need to be specific with the rights of every shareholder. On the other hand, you should also be clear about their roles and responsibilities. By having a sale of shares agreement, you can establish a good relationship with every shareholder. This is because everyone will know their part of how to participate well in the business. Everyone will be apt in doing their duties and this can benefit your business a lot.Better Decision Making: If you have a sale of shares agreement, you can be specific with the rights, roles, and responsibilities of your shareholders. When this happens, you will not have any hindrances in decision-making. This is because you will know how to decide on everything. It may be hard to decide when you know that many people have to be considered. But through the sale of shares agreement, you will know how to decide even though shareholders are involved. The sale of shares agreement will serve as a partner agreement for your business. It will be easy for you to handle your business even though you have many shareholders.Having Predictability: It may be a little challenging to handle a business when you have shareholders. You know that you are not going to make everything on your own. But through a sale of shares agreement, everything can be predictable. At times, things may be unforeseeable because you are not the only one who is handling the business. But because you are clear on the terms of their rights and responsibilities, it will still be easy for you to control your business. So, you do not have to fear that unexpected things will happen.
How to Get a Sale of Shares Agreement
You may be wondering if it is possible to write your own sale of shares agreement. Yes, this is possible if you will just have enough knowledge on it. We have prepared some steps that can help you in writing a sale of shares agreement.
1. Decide on Terms
First, you should know what your agreement should cover. Whether you are going to have a startup shareholder agreement or going to have a stock purchase agreement for a big business, you and the shareholders must negotiate and decide on terms.
2. Identify Interests
Before drafting the agreement, you must know first the interest of each shareholder. This will help you to finalize the rights and roles of every shareholder. If possible, you can also have a profit participation agreement.
3. Know Shareholder Value
Then, of course, you have to talk about the shareholder value. Choose the right way to estimate a value for a shareholder. Protect every shareholder value. Be clear in negotiations about the shareholder value with each shareholder.
4. Decide on Power of Shareholders
The last thing that needs to be negotiated is the power of each shareholder. You should identify how each shareholder will participate in decision-making. Usually, the power of shareholders depend on the percentage of their shares.
What are the tips for a sale of shares agreement?
The tips for a sale of shares agreement are reading the warranties carefully, limiting the scope of warranties, including a threshold for a claim, and making sure you understand what you are signing.
What is included in a sale of shares agreement?
The things that are included in a sale of shares agreement are:
- The party who sells the shares
- The party who buys the shares
- The value of shares
- The company that is selling and buying the shares
- The type of shares
- The law governing the agreement
It may be easy to buy shares of a company if you have the necessary money. But for your protection, you need a sale of shares agreement. The agreement will have all the terms about your rights so you can secure a good business all the time. This is not only good for the buyer but for the seller also. The sale of shares agreement is the key to a good relationship between shareholders.