Buying and Selling Shares in a Company

Are you considering buying or selling shares in a company?
Our experienced commercial team can assist you through each step. This will likely include preparing and negotiating a “sale and purchase agreement” as well as advising you on other documentation and considerations relevant to the sale and purchase of the shares.

What will you find in a Share Sale and Purchase Agreement?

When arranging for the sale or purchase of shares, you can expect to see some of the following terms in the agreement:

• The number and types of shares in the company, as well as how many shares are to be sold.
• The purchase price for the shares. This is usually based on the market valuation for the shares being sold, often determined by an accountant or business broker’s appraisal of the company’s value. Sometimes, the purchase price for the shares can be impacted by the results of any due diligence enquiries.
• Warranties given by the seller. These warranties vary between each agreement, but often include guarantees that the shares are in fact owned by the seller and will be transferred to the purchaser free of any security interests. These warranties, although fairly straightforward and common sense, are an important safety net for purchasers.
• Undertakings about the conduct of the business. These undertakings ensure that the seller continues to run things “business as usual” and will not commit the company to any major obligations, agreements or liabilities before settlement without the purchaser’s consent.
• Conditions to the agreement such as due diligence or the purchaser arranging finance.
  
  

How else can Davenports Law assist with the buying and selling of shares?

In addition to preparing, reviewing and negotiating the Share Sale and Purchase Agreement, we can assist you through all other key aspects of the transaction by:

• Conducting your due diligence as a buyer, including investigating any security interests registered against the shares and reviewing any agreements the company has entered into with its landlord, suppliers or customers.
• Reviewing the company’s Shareholders’ Agreement and Constitution and advising you on how this may impact your rights to either buy or sell the shares in the company.
• Preparing any additional seller’s documents that are required to complete the share sale such as: company resolutions, waivers of pre-emptive rights, directors’ appointments and resignations and share transfer forms.
• Assisting with the settlement of the share sale, including making arrangements for payment of the purchase price and updating the company records with the New Zealand Companies Office.
• In the case of vendor finance, preparing the loan agreement and the appropriate security documentation.

Our commercial team has the practical business knowledge and experience to assist you throughout the transaction of shares, ensuring that your best interests are represented.

Contact us for advice on buying and selling shares.