Sale of Shares Agreement Template South Africa – in total to an existing shareholder

SALE OF SHARES AGREEMENT

In total, to an existing shareholder

Summary

A Sale of Shares Agreement may be used when a shareholder sells all the shares that they own in a Company to a purchaser, where the purchaser is already an existing shareholder of the Company. A written contract for selling shares includes reference to confidentiality and restraints, amongst other detailed provisions. The Agreement caters for more than one Shareholder selling their shares, if applicable.

Why do I need a Sale of Shares Agreement?

A written contract for selling shares in a company sets out the terms of the sale of a shareholder’s shares to an existing shareholder in the company. A number of issues need to be negotiated during a Company’s sale of equity, such as the purchase price, the handover process, confidentiality, and restraints. These issues need to be included in the Sale of Shares Agreement to eliminate uncertainty and ensure that both sellers and the purchaser understand their respective rights and obligations during the sale.

What does this agreement say?

The template agreement consists of: Parties; Definitions; Sale of shares; Suspensive Conditions; Purchase price and payment; Delivery of documents; Warranties; Indemnities; Breach; Restraint of Trade; Confidentiality; Dispute Resolution; Pre-emptive rights; Notices; General.

Note: if the entity is a close corporation, you’ll need the Sale of Member’s interest Agreement.

What does the contract look like?

The template contract can be printed onto ten pages.

What do you need to do to use the Sale of Shares Agreement?

• Read the document to ensure that it suits your requirements, and make changes as required. The Agreement can be used for one or more shareholders selling shares, in which event clause 1 (Parties), clause 16 (Signatures) and Annexure 1 (Sale details) can be adjusted accordingly.
• Complete the relevant details, such as the details of the Seller/s and Purchaser, the name of the Company and the purchase price and terms in Annexure 1. Ensure that any blanks in the document have been completed.
• Ensure all the parties sign the agreement and receive a copy.
• The new shareholders should also review their Shareholders Agreement.

Also viewed:

• Sale of Shares Agreement – in part to an existing shareholder
• Sale of Shares Agreement – in total to a non-shareholder
• Sale of Shares Agreement – in part to a non-shareholder

The benefits and use of a Sale of Shares agreement:

A Sale of Shares Agreement (also known as a Share purchase agreement) is a written contract that outlines the terms and conditions of the sale and purchase of shares in a private company when a shareholder sells their shares. This agreement is applicable to all the parties involved in the transaction, including the existing shareholder, the shareholder selling their shares, the purchaser, and other shareholders within the company.

A Sale of Shares Agreements is a template share sale that contains provisions related to the sale of all the shares or a portion of the shares, the purchase price, company details, buyer details, seller details, payment, date, any warranties made by the buyer and seller in respects of the sale of shares template, the transfer of the shares from the seller to the buyer and the obligations of the seller and buyer as well as the rights of each party to the sale of shares . It also includes warranties related to the ownership of the shares being sold and the value of the shares.

One of the benefits of having a document such as a Sale of Shares Agreement or share sale is that it protects the interests of the parties involved in the template sale as well as the company. The agreement helps to avoid disputes by outlining the terms of the template sale and purchase of shares, such as the price one would pay under the share sale document, in a clear and concise manner should a shareholder want to sell. The document also provides pre-emptive rights to other shareholders within the company should someone decide to sell, allowing them the opportunity to purchase the shares before they are sold to a third party.

The Purchase of Shares Agreement is governed by the Companies Act and it is essential that all the documents related to the sale and purchase of shares are in compliance with the Act. The agreement also includes clauses related to dispute resolution and notices.

As an existing shareholder, it is important to understand the terms of the Sale of Shares Agreement, especially if you are considering selling your shares. The agreement outlines, for example, transfer of shares, obligations of each party, the form of the transaction in respect of the agreement between the buyer and seller for the transfer of shares, warranties by both the seller and buyer as well as by representative of the companies where applicable within this document, by the consideration paid for the shares, and the date of payment. It also protects your interest as a person by ensuring that the purchaser pays the purchase price in full and that any breach of the agreement is dealt with appropriately.

What distinguishes this document from a Share Subscription Agreement is that a share subscription contract is used in cases where a company is selling its shares, while in this agreement, a shareholder of the company is selling already issued shares to another party.

In summary, a Sale of Shares Agreement is a vital document for any shareholder involved in the sale or purchase of shares and the transfer thereof in a private company. It protects the interests of all the parties involved in the conclusion of this document and ensures that the transaction is conducted in a fair and transparent manner.

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