It is often a tax alliance, compensation or tax debt, but its purpose is always the same, it protects the purchaser for all tax liabilities that may not have been detected by the duty of care. The buyer follows in the seller`s footsteps as a shareholder or director, but the employees, contracts, real estate, etc. of the company remain the property of the company. The transfer of the company`s assets is therefore not necessary, so a sale of shares can often be completed without the participation of third parties. The purchase of shares is therefore often much more discreet than a purchase of assets. This article deals with the general concepts and variations of a GSB, but it is by no means exhaustive. Specific transactions and companies in different sectors require different conditions and are often the subject of in-depth negotiations between the parties. This section does not take into account the laws of a particular jurisdiction and does not address antitrust or anti-competitive considerations that may be relevant in certain M-A transactions. In addition, SBPs may also be controlled or affected by existing shareholder agreements between the shareholders of a target company. Representations, guarantees and commitments made in a G.S.O. should survive the execution and delivery of the OSG and the closing of the transaction, beyond the closing of the transaction.
Some misrepresentations and breaches of the warranty may not be visible until after completion. The survival of representations, guarantees and pacts (as well as compensation terms) beyond the conclusion of the transaction protects the buyer if he receives less than he negotiated. However, the parties should carefully consider the existing legislation of the OSG to determine how the jurisdiction assesses and imposes statutes of limitations. Some jurisdictions prohibit exceeding contractual rights beyond the jurisdiction`s statute of limitations, even if the parties to a CSE explicitly agree on a language of survival that allows a right to the infringement to go beyond the jurisdiction`s statute of limitations. Share purchase contracts can be used in all cases where one person or company sells shares to another. Agreements are most used when the shares in question are transferred to companies in two different countries under two different legal systems or when the shares are sold outside a standard trading platform or a stock exchange. A ”single materiality cratifier” retains the terms materiality and knowledge to determine whether a seller made a false presentation or violated a warranty, but if a misrepresentation or violation has been found, the term meaning is not taken into account when determining damages. Subject to any deductible limitation and other damages in the G.S.O., the purchaser may compensate the entire amount of his damages caused by the violation. A ”double materiality cratifier” denies the terms of materiality and knowledge, both to determine whether an misrepresentation has been made and whether a guarantee has been breached and for calculating the damage caused by such an offence.
When it comes to buying and selling businesses, one of the easiest ways to transfer ownership is by selling the company`s shares.