A business owner agreed to sell her belongings to a friend. The friend agreed to buy the business by buying the shares of the owner`s company, because it seemed to be the easiest way to do things. Share subscription contract for new shares. It is the protection of the buyer. Creation of majority or minority shareholdings. All sectors. Full version, options for significant guarantees from other shareholders. Retention against poor performance. Other versions are available. A conditional agreement means that the sales contract has one or more conditions to be fulfilled before a given date. Assuming you do not manage the transaction in your personal capacity, the first question is whether you will sell the assets or sell the shares (we refer to shares in this article, but if you do not conduct your business through a limited liability company, our comments apply in the same way to the sale of other relevant stakes). In making this decision, we advise you to seek the advice of your legal or accounting advisor, who can help you evaluate the options.
They must also work with the buyer to find an amicable solution. When a business is owned by a business, the business can be purchased under a single option by purchasing the company`s shares. While this method is less common than buying the company`s assets, it can offer some obvious benefits, provided the buyer understands the consequences. Section 149 of the Companies Act is probably the first issue to consider. It requires suppliers to be fully informed to potential buyers of all the essential information they have about the business. In the past, we have found that selling assets is more popular, as it is inevitably difficult for a buyer to focus on the fact that they have quantified the risk of any potential liabilities they assume when buying the business. The entity is a legal person and remains responsible for its previous actions, even if the shareholders change. This can be a major problem for potential historical liability risks (think miscalculated taxes or recent examples of miscalculated leave fees) and issues that the seller isn`t even aware of.
A buyer may feel comfortable combining their duty of care with the comfort of warranty/indemnification protection, but this may be contrary to a seller who wants to take and run their money. The sale of assets allows the parties to choose the assets and liabilities transferred to the buyer and significantly reduce the risk of „unknown persons“. Most sales are rather friendly, but there are things that the selling shareholder – and other shareholders – need to know about the legal process to get a good result. You can submit an unconditional offer, which means that no special conditions must be met, or you can include in your offer one or more conditions (which must be met before a given date). Ask your lawyer or intermediary to check the sales contract and any terms you include before you sign it….