About this documents:
This documents is for selling / buying a minority or majority stake in a company. This authoritative document can be used for high value transactions and any sort of business. Note that the type of business is generally of low importance. You can use this templates to buy into a trout hatchery or an architect’s practice.
Sale /purchase of all shares in a company SC-CP201 to 207 provide templates for different scenarios.
Agreements for sale of a business, where you are selling or buying not shares in a company but just the business as a going concern.
A word about warranties
Warranties protect the interest of the buyer, who does not have the information available to the seller. It is fair and reasonable for a buyer to demand warranties and for a seller to give them. However, it is quite easy for a buyer to use warranties to “improve” his original deal. So, if you are a seller . . . . do not give a warranty if you do not know whether it is true, but do be prepared to “go and find out” information that could be within your knowledge.
140 warranties sounds an awful lot. Do you really need them? Will you understand them? Scot Lawman advises: absolutely yes and absolutely yes! Our warranties are written in plain English. A seller should start with a full set unless he is sure he knows everything there is to know about his proposed acquisition, or the value is very small, or the company is not trading.
Scot Lawman document templates offer around 150 “full” warranties, or a reduced set of around 115. Either way, around 30 cover real property, so if your company has none, the number comes down.
First, we cover matters common to most or all of the agreements, then we tell you what is in this particular document.
Why you need such a long document
Our job is to protect the buyer or seller, not to make decisions about what you do or do not need in your contract. You can delete anything which does not suit your transaction.
This document assumes a buyer is buying perhaps 20% to 60% of the shares. He may also be arranging a loan facility or otherwise supporting the company (these other arrangements are not covered in this document, but Scot Lawman can supply a loan document, shareholders’ agreement and directors’ service contracts). It is assumed that the Buyer wants the same level of protection as he would expect if he was buying the whole company. In this agreement, the warranties are given not only by the sellers of shares but also by those “staying in”.
Who will use these documents?
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Any individual or company selling or buying a stake in a company. It is usual for the buyer to produce the sale document but there is no reason why the seller should not obtain an advantage by making the document his and thereby obtaining the advantage of preliminary editing in his favour.
This document enables a buyer to decide how tough he wants to be and who he wants to bind. As drawn, the document binds all the shareholders, not just those selling, but politics may require warranties to be given only by those departing.
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A seller of shares wanting tips and hints as to what is fair and reasonable in a document comparable to the one now presented to him by the buyer or his solicitors.
Key features
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this agreement is suitable for any type of trade or business;
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extensive use of warranties encourages full disclosure by the sellers and the ongoing shareholders;
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drawn for the deal to be completed on the same day, not at some future time;
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suitable for a single company of any size;
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suitable provisions for contract to cover leasehold, freehold and tenanted property;
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up to 150 individual warranties where required;
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retention up to one year against reduction in forecast profit and warranty claims;
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Provision for some sellers to be trustees and not therefore bound by the warranties
This document includes paragraphs for:
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Agreement for sale
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Purchase price and how made up
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New shares to be issued to buyer
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Calculation of minimum profit
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Completion of the deal and delivery of documents
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Warranties applicability
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The Warranties
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Trustees limited Warranties
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Restrictive agreement to prevent Sellers from competing afresh
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Sellers protection provisions
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Various legal provisions usual in a document of this type
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Existing shareholdings
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Details of the company
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The warranties
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Particulars of the properties
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Superannuation arrangements
The 140 individual warranties are in sections relating to:
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General
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Effect of this agreement
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Group structure and operation
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Accounts
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Cash flow
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Taxation
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Bank and borrowing
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Assets
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Trading and contracts
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Business matters
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Litigation and regulation
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Properties - freehold, leasehold and let
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Employment
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Pensions
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Insurance
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Intellectual property
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Internet and domain names
