Share Sale Agreement Ontario

Once all this has been explained, it is important to note that while the rule seems that buyers prefer asset sales and sellers prefer stock sales, there are many situations where a buyer or seller might prefer the exception to the rule. 5. Guarantees and compensations – The buyer will provide in the agreement important guarantees of the seller on the assets and commitments of the company. The buyer acquires the company with all its history and potential debts. The buyer will attempt to identify potential problems through due diligence prior to the conclusion, but there may be things that are not identified, such as a breach of a major contract of the target company, either by the company itself or by the other party, or a termination of the employee that occurred but has not yet resulted in an effective claim for compensation. As a general rule, the buyer wants the seller to be responsible for any claims related to activities in the store that occur before the conclusion, whether or not the seller is aware of the potential of a claim. On the other hand, the seller will try to limit his potential liability to the questions that will give him away. This is usually a very negotiated point. The seller will also want to negotiate a minimum threshold for receivables, i.e. a minimum value of the dollar claims authorized by the seller before the buyer claims claims, as well as a maximum period and a ceiling for the seller`s compensation obligations. The seller`s objective is not to pursue any liability for the transaction after the sale, and the buyer`s objective is to ensure that he is not debited debts which he did not know about the setting of the purchase price and the decision to proceed with the transaction. Another important consideration in acquiring shares in a company is whether there are other shareholders.

If a buyer does not buy 100% of the company at the end, it could end up with minority shareholders who may be difficult to manage. When buying all the shares of a company (100% of the shares), it is recommended to use the purchase of commercial agreements instead.