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This might include provisions for price and payment, conditions precedent to sale, completion arrangements, warranties, restraints and miscellaneous provisions (such as indemnity clauses, tax provisions or confidentiality agreements).
It details specific information about the stock transfer, including warranties, dispute resolution measures, allocation of costs, etc. It is a binding agreement that ensures the stock transfer will proceed. The buyer and seller can review the agreement and get a clear understanding of the transaction in advance.
Stock Purchase Agreement (SPA). This transfers the shares of the entity, otherwise known as a corporation or LLC, that owns the assets of the business. By purchasing the shares of the entity, the buyer owns the entity's assets.
In a stock purchase, on the other hand, the buyer purchases stock in a company that may have unknown or uncertain liabilities. It is necessary for the selling company's assets to be re-titled in the name of the buyer. This is not required in a stock transaction.
If you are planning to buy or sell shares, a correctly drafted share purchase agreement (SPA) is essential. An SPA is a legal document and it must therefore comply with legislation by providing either party in the transaction with accurate information.
A stock purchase agreement typically includes the following information: Your business name. The name and mailing address of the entity buying shares in your company's stocks. The par value (essentially the sale price) of the stocks being sold. The number of stocks the buyer is purchasing.
This means that the Seller is entitled to the cash on the balance sheet on the closing date of the transaction, and that the Seller is responsible for debts owed by the company (defined as Indebtedness).