Reading time: 3 minutes

Are you looking to sell the shares in your company? Or perhaps you are looking to purchase shares from a shareholder of a company. Either way, you will need a Share Sale Agreement drafted.

The basics

Firstly, the share sale agreement should set out:

  • the parties to the transaction, being, the vendor, the purchaser and the company itself;
  • the number of shares being sold from the vendor to the purchaser; and
  • the price that the buyer will be paying for the shares.

Vendor’s obligations

The vendor has several obligations before this transaction can be completed. The vendor’s obligations will often include:

  • handing over a share transfer form;
  • signing a letter of resignation if the vendor was a director and/or employee of the company; and
  • returning all company property including any phones, laptops, documents, etc. that may be in his or her possession.

Purchaser’s obligations

Compared to the vendor, the purchaser has fewer obligations prior to completion of the transaction. Generally, the purchaser is simply required to accept the documents and items being provided by the vendor, and pay the purchase price.

Non-disparagement

Non-disparagement clauses are often included so parties are prevented from making negative and/or damaging comments about the other. This is often used when the vendor and purchaser are shareholders of the same company, and one shareholder is leaving by selling his or her shares following an ongoing dispute or failed business relationship.

Indemnities and releases

A share sale agreement often contains a detailed indemnities and release clause.
This clause will set out what the vendor indemnifies the purchaser against, and vice versa, what the purchaser indemnifies the vendor against. For example, the vendor will indemnify and release the purchaser and the company from any monetary claims it may have against the purchaser and the company, prior to the completion of the agreement. On the other hand, the purchaser will indemnify the vendor for any claims which arise in relation to the purchaser and/or the company after the ownership of the shares have been effectively transferred from the vendor to the purchaser.

Conclusion

There are a number of other items which need to be covered in a share sale agreement. These will be covered in Part 2 of this series, stay tuned! If you’d like to speak to a contract lawyer about drafting or reviewing a share sale agreement, you can get in touch with LegalVision by calling us on 1300 544 755!

Webinars

Redundancies and Restructuring: Understanding Your Employer Obligations

Thursday 7 July | 11:00 - 11:45am

Online
If you plan on making a role redundant, it is crucial that you understand your employer obligations. Our free webinar will explain.
Register Now

How to Sponsor Foreign Workers For Your Tech Business

Wednesday 13 July | 11:00 - 11:45am

Online
Need web3 talent for your tech business? Consider sponsoring workers from overseas. Join our free webinar to learn more.
Register Now

Advertising 101: Social Media, Influencers and the Law

Thursday 21 July | 11:00 - 11:45am

Online
Learn how to promote your business on social media without breaking the law. Register for our free webinar today.
Register Now

Structuring for Certainty in Uncertain Times

Tuesday 26 July | 12:00 - 12:45pm

Online
Learn how to structure to weather storm and ensure you can take advantage of the “green shoots” opportunities arising on the other side of a recession.
Register Now

Playing for the Prize: How to Run Trade Promotions

Thursday 28 July | 11:00 - 11:45am

Online
Running a promotion with a prize? Your business has specific trade promotion obligations. Join our free webinar to learn more.
Register Now

Web3 Essentials: Understanding SAFT Agreements

Tuesday 2 August | 11:00 - 11:45am

Online
Learn how SAFT Agreements can help your Web3 business when raising capital. Register today for our free webinar.
Register Now

Understanding Your Annual Franchise Update Obligations

Wednesday 3 August | 11:00 - 11:45am

Online
Franchisors must meet annual reporting obligations each October. Understand your legal requirements by registering for our free webinar today.
Register Now

Legal Essentials for Product Manufacturers

Thursday 11 August | 11:00 - 11:45am

Online
As a product manufacturer, do you know your legal obligations if there is a product recall? Join our free webinar to learn more.
Register Now

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Need Legal Help? Submit an Enquiry

If you would like to get in touch with our team and learn more about how our membership can help your business, fill out the form below.

Our Awards

  • 2020 Innovation Award 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Award 2020 Employer of Choice Winner – Australasian Lawyer
  • 2020 Financial Times Award 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year Award 2021 Law Firm of the Year - Australasian Law Awards
  • 2022 Law Firm of the Year Winner 2022 Law Firm of the Year - Australasian Law Awards