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Contract Of Sale Of Shares for the United Kingdom

Contract Of Sale Of Shares Template for England and Wales

A Contract of Sale of Shares is a legally binding agreement governed by English and Welsh law that documents the transfer of ownership of shares from a seller to a buyer. The agreement sets out the terms and conditions of the sale, including the purchase price, warranties about the shares and the company, completion mechanics, and any post-completion obligations. It provides legal protection for both parties and ensures compliance with UK company law requirements.

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Contract Of Sale Of Shares

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What is a Contract Of Sale Of Shares?

The Contract of Sale of Shares is a fundamental document used in corporate transactions under English and Welsh law when transferring ownership of shares in a company. It is typically used in private company transactions, mergers and acquisitions, or corporate restructuring. The document includes crucial elements such as the sale terms, warranties about the company and shares, completion mechanics, and often tax provisions. It ensures compliance with the Companies Act 2006 and other relevant legislation while protecting both parties' interests throughout the transaction.

What sections should be included in a Contract Of Sale Of Shares?

1. Parties: Details of the seller(s) and buyer(s)

2. Background: Context of the transaction and company details

3. Definitions: Key terms used throughout the agreement

4. Sale and Purchase: Core transaction terms including price and shares being sold

5. Completion: Timing and mechanics of the transfer

6. Warranties: Standard seller warranties about the shares and company

7. Confidentiality: Provisions regarding transaction confidentiality

8. Governing Law: Jurisdiction and applicable law

What sections are optional to include in a Contract Of Sale Of Shares?

1. Tax Covenant: Additional provisions to address tax liabilities, typically used for larger transactions

2. Non-compete Provisions: Restrictions on seller's future activities to protect company's business interests post-sale

3. Earn-out Provisions: Mechanisms for future payments based on company performance post-completion

What schedules should be included in a Contract Of Sale Of Shares?

1. Schedule 1: Details of the Company: Company information including share capital structure

2. Schedule 2: Warranties: Detailed warranties about the company and business

3. Schedule 3: Completion Requirements: List of documents and actions required at completion

4. Schedule 4: Properties: Details of company's property interests

5. Schedule 5: Intellectual Property: Details of company's intellectual property rights

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

England and Wales

Publisher

Ƶ

Document Type

Security Agreement

Cost

Free to use
Relevant legal definitions
































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Industries

Companies Act 2006: Primary legislation governing company law in the UK, covering share transfer provisions, pre-emption rights, share capital requirements, directors' duties, and company registration requirements

Financial Services and Markets Act 2000: Regulates financial services industry and markets, including provisions for transfer of securities, financial promotion rules, and investor protection measures

Law of Property (Miscellaneous Provisions) Act 1989: Sets out formal requirements for creation and transfer of legal interests in property, including shares

Misrepresentation Act 1967: Governs remedies for misrepresentation in contracts, including share sale agreements

UK Takeover Code: Regulates takeovers and mergers of public companies, may be relevant depending on transaction size and company status

Market Abuse Regulation (MAR): European regulation addressing insider dealing, unlawful disclosure of inside information and market manipulation

UK Listing Rules: Regulations applicable if the shares being sold are in a listed company

AIM Rules: Specific regulations if the company is listed on the Alternative Investment Market (AIM)

Competition Law: May require consideration if the share sale meets certain thresholds requiring competition authority approval

Data Protection Act 2018/GDPR: Regulates the processing of personal data that may be involved in the transaction

Money Laundering Regulations 2017: Requirements for prevention of money laundering and terrorist financing in financial transactions

Stamp Duty Reserve Tax Regulations: Tax implications and requirements for share transfers

Capital Gains Tax Legislation: Tax considerations for the seller regarding profit made on the sale of shares

Articles of Association: Company's internal regulations that may contain specific requirements for share transfers

Shareholders' Agreement: Existing agreement between shareholders that may contain restrictions or requirements for share transfers

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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