Reading time: 2 minutes

Are you a shareholder of a company? Are you looking to sell your shares? If you answered yes to both questions, read on! This article will explore the types of warranties that should appear in a Share Sale Agreement from a vendor’s perspective. In other words, what warranties will be made by the purchaser to the vendor of the business.

If the purchaser has drafted a share sale agreement for you to sign, amongst other things which need to be covered in a share sale agreement, there should be a detailed suite of warranties to be provided by the purchaser.

Types of Warranties

These warranties may include, but are not limited to, the following:

  • the purchaser will be not be in breach of any existing obligations or agreement in completing this transaction;
  • the purchaser has full power and capacity to perform all of its obligations under the share sale agreement;
  • the purchaser agrees to enter into the company’s existing shareholder agreement (if the company has one available); and
  • the purchaser is entering into this share sale agreement on its own account and not as a trustee for another person or entity.

Additional Warranties

If the purchaser is purchasing the shares as a company, you will want some additional warranties from the purchaser. This includes, for example:

  • that it is validly incorporated in accordance with the applicable laws;
  • that it has not gone into, or is proposed to go into, liquidation; and
  • that there is no process for winding-up or dissolution which has been presented or threatened against it.

Similarly, if the purchaser is an individual, you will want a warranty that he or she is not bankrupt, and therefore able to make payment of the purchase price on completion.

Conclusion

As a vendor, you will generally be required to provide a much more detailed suite of warranties – especially if the purchaser is not part of the company already and has not had access to important company information. If you want to know what sort of warranties a purchaser will want from you, stay tuned for our article on Vendor Warranties.

For more information and legal assistance, call LegalVision on 1300 544 755 and get a fixed-fee quote for drafting or reviewing your Share Sale Agreement.

Webinars

Raising Capital: Getting Investment Ready

Tuesday 6 April | 12:00 - 12:45pm

Online
Are you a founder or business owner looking to raise capital? Attend this webinar to learn the strategies to prepare your business for investment.
Register Now

The COVID-19 Vaccine Rollout: Considerations for Employers

Thursday 22 April | 11:00 - 11:45am

Online
Are you a business owner or employer? Attend this webinar to learn about what you need to know about the COVID-19 vaccine rollout.
Register Now

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. From just $119 per week, get all your contracts sorted, trade marks registered and questions answered by experienced business lawyers.

Learn more about LVConnect

Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

  • 2020 Excellence in Technology & Innovation – Finalist – Australasian Law Awards 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice – Winner – Australasian Lawyer 2020 Employer of Choice Winner – Australasian Lawyer
  • 2020 Fastest Growing Law Firm - Financial Times APAC 500 2020 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review 2020 AFR Fast 100 List - Australian Financial Review
  • 2020 Law Firm of the Year Finalist - Australasian Law Awards 2020 Law Firm of the Year Finalist - Australasian Law Awards
  • Most Innovative Law Firm - 2019 Australasian Lawyer 2019 Most Innovative Firm - Australasian Lawyer