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Shareholders Purchase Agreement(SPA)

  • To raise capital
  • Terms and conditions for purchasing the company’s share
  • Drafting of agreement
  • Stamped duty on SPA
  • Professional’s Advice
  • Simple online process

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Introduction

In order to grow a business new investors are introduced to the business to raise capital. However, introducing the new people to the company and empowering them with the rights to vote in the decision-making process of the Company makes it vulnerable and invitation to numerous threats. Hence in such a case creation of a legal document in that place can prove beneficial not only for the company but also the new shareholders being admitted.

A SPA is a legal contract executed by and amongst a seller and a buyer. It lays down the terms and conditions for purchasing the company’s share and also acts as an evidence for the shareholder justifying that he/she is the legal buyer of the particular number of shares in the Company.

The share purchase agreement comprises information pertaining to the type of shares purchased, the total number of shares purchased, the price at which such shares are purchased, and the rights and liabilities of the company and its shareholder. The primary objective of share purchase agreement is to ensure that the terms and conditions of sale and purchase of company’s shares should be mutually agreed by both sides.

Advantages
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Advantages of Share Purchase Agreement

Legally Binding

As the Share Purchase Agreements are being formally executed between the parties for sale of shares making the transaction legally accurate as well as organized by clearly stating.

Reduces Complications

SPA is detailed and covers all the areas involved for undertaking the transaction thereby making it unambiguous and also reducing the possibilities of confusion in the future.

Tracking of Records

These Agreements help the appropriate authority to keep track of the similar transactions and enforce them.

Protect Rights & Interests

Such legal documents also help in protecting the rights and interests of both the seller and the purchaser to mitigate and minimize the chance of risk of getting conned.

Process
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Process of Drafting of Shareholders Purchase Agreement(SPA)

1. Placing request

As we receive a request from you for drafting of shareholders agreement, our expert team will share a questionnaire to be filed by you for taking your request forward.
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Step 01

2. Drafting of agreement

After receiving the said questionnaire and the information relevant for drafting of the agreement we will begin to draft the same and if in need we require any other information the same will be sought by us through a call. The drafting of the agreement might take 2-4 business days.
Step 02

3. Sharing of Ist draft

Once the agreement is ready from our side we will share a draft of the same with you for final approval. If you find the same in order the final copy will be shared in a day and if corrections or additions are required then the same will be revised and verified by our team.
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Step 03

4. Sharing of Final Agreement

Our experts will do the needful and the same will be shared with you as final agreement.
Step 04
Importance
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Importance of Share Purchase Agreement

Due Diligence

A Share Purchase Agreement is a fundamental way of business process ensuring diligence while introducing an investor to the Company. While adopting a flexible policy to such issues and lack of such legal agreements might have few unwanted consequences on the business and gives an invitation to the legal threats

Protects Parties

The share purchase agreement provides an opportunity to the parties to protect their own interests before the shares are exchanged. SPA covers each part of the transaction and is important for the parties to have a look at every clause mentioned in the document and to understand its significance.
Agreement
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Key Contents of Share Purchase Agreement

  • Details of the buyer, seller and the company
  • The permissions, authorisations, etc. need to be taken before the transfer or sale of shares by the shareholder.
  • Information about the pricing at which the shares are sold by the company.
  • Dispute resolution and arbitration process in cases of legal disputes arising.
  • The liabilities and obligations of both parties.
  • Details of the number of shares and kind of shares purchased.
  • The rights that are given to the shareholder.
  • Jurisdiction of the court and law applicable in case of a legal dispute.
Faq's
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FAQ's On Share Purchase Agreement

What is a Share Purchase Agreement?
A SPA is a legal contract executed by and amongst a seller and a buyer i.e. the company and the shareholder. It lays down the terms and conditions for purchasing the company’s share and also acts as an evidence for the shareholder justifying that he/she is the legal buyer of the particular number of shares in the Company.
What is the importance of signing this agreement?
Due Diligence- A Share Purchase Agreement is a fundamental way of business process ensuring diligence while introducing an investor to the Company. While adopting a flexible policy to such issues and lack of such legal agreements might have few unwanted consequences on the business and gives an invitation to the legal threats. Protects Parties- The share purchase agreement provides an opportunity to the parties to protect their own interests before the shares are exchanged. SPA covers each part of the transaction and is important for the parties to have looked at every clause mentioned in the document and to understand its significance.
Whether it is necessary to get the document stamped/e-registered?
Yes, it is advisable that you get the contracts stamped/e-registered.

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