A share purchase agreement (SPA) is executed between the sellers of shares and their purchasers or incoming investors. This legally binding contract is common in all types of businesses, particularly when a new shareholder is investing capital in a company or an existing shareholder is selling shares to a third party. It is typically executed before closing an investment deal. Below is an example of a share purchase agreement to help you understand the key elements of such a document. The parties to a share purchase agreement usually agree to the following terms:

1. **Purchase and Transfer of Shares**:
– Under the terms and conditions set forth in the share purchase agreement, and in consideration of mutual understanding, the purchasers agree to buy, and the sellers agree to transfer and deliver, the purchased shares. These shares are to be free and clear of all encumbrances and come with all attached and accrued rights.
– The purchase price, agreed upon in advance, will be the full and final payment for the purchased shares. The shares transferred to the purchasers will rank pari passu with other equity shares of the company in all respects, including entitlement to receive dividends and other distributions.

2. **Covenants and Undertakings**:
– The sellers and the company agree and undertake not to enter into any commitments or transactions that could adversely impact the share transfer. They also agree not to do or permit anything that would constitute a breach of any terms of the agreement.
– The company confirms that it is not involved in, and has not been threatened with, any material litigation.

3. **Exercise of Voting Rights**:
– The sellers agree to exercise their voting rights in shareholders’ meetings and ensure that the directors nominated by them on the company’s Board exercise their votes to give full legal effect to the terms of the share purchase agreement. This includes amending the company’s charter documents if necessary to incorporate the terms of the agreement.

4. **Governing Law, Dispute Resolution, and Jurisdiction**:
– The governing law, dispute resolution mechanisms, and jurisdiction are explicitly decided in the agreement.

The above example outlines what is typically included in a share purchase agreement. This type of agreement essentially sets forth the complete understanding between the sellers and purchasers of shares regarding the subject matter. For a detailed understanding and legal advice on a share purchase agreement, including the governing laws, you can contact Evaluer, which provides excellent business agreement services. Attorneys at Evaluer specialize in drafting commercial contracts.