A stock purchase agreement is a contract between the seller and the purchaser that transfers ownership of stocks. Most of the provisions of a stock purchase agreement have to do with the actual transaction, such as the date of the transaction, the number of stock certificates, and the purchase price. A third aspect of the agreement ought to include the name of the corporation whose stock is being sold. Additionally, stock purchase agreements must outline the nature of the contract as well as include certain terms and conditions. The seller will transfer and deliver all certificates referencing the stock sold and the buyer will pay the purchase price specified in the agreement as consideration for the stock being purchased at the closing of the transaction.
The key provisions that make up a stock purchase agreement are:
Describe the date. As part of the opening recital, you can find the date of the agreement as well as the names of the parties, the seller and purchaser.
The number of shares and their price. It includes the name of the corporation that issued the stock, the number of shares, and the dollar value of each share of common stock that is involved in the transaction.
The purchase and sale of goods. The seller is required to convey ownership of the stock certificates to the purchaser at the end of the sale. The seller will pay any tax related to transfer of certificates, and all certificates will be endorsed according to transfer requirements.
Description of the seller’s warranties and representations. A statement that the company is legally entitled to issue the stock and that the company Also, this provision establishes that the seller is the owner of the stock, and as such, is entitled to sell the stock to the buyer.
Statements of warranties and representations by seller and buyer. The corporation, purchaser, and seller all stipulate that there has been no omission by any of them. The truth has been revealed all along.
The following provisions apply to all. They include the entire agreement clause as well as a statement that the contract complies with the laws of the country where it is
There were witnesses. Signed by witnesses, this section is where the document is signed. In order for the agreement to have legal force, witnesses must be present.
This determines the amount and the payment timeframe of the purchase price. It identifies when the purchaser will pay the seller for the stock they bought. Most often, a percentage of the amount will be payable upon signing, with the remainder due when the deal is completed.