Stock purchase agreement when anybody heard about this, generally comes to mind it must be an agreement for purchasing a stock. Actually it means an agreement between a private company and its share holder. The purpose of this agreement to regulates the sale and transfer of company’s share. In these type of agreement generally consists terms as the right of first refusal, redemption of the share, bankrupt, resigns, retires or dies.
While signing a stock purchase agreements there are some important facts that we have to go through them:
· How many shares have being sold and what is the purchase price of the stock.
· Representation and warranties given from seller side: The company or organization selling stock is in good position in the market, has the authority to enter through the agreement and perform its obligation, all the statement made by the seller must be under accounting principle and represent the financial condition of the business, must provide the accurate list of all tangible and intangible assets of the business, the seller has no illegal according to any federal, state, or local laws and many more representation and warranties are there which can be described by a good stock purchase agreement lawyer.
· Representation and warranties given from buyer side: In case of buyer side the first two points are same as seller side that is; the seller is in good position and authority to enter through the agreement. The extra thing is in buyer part is the purchase is in cash or non-cash.
· After consulting a good business lawyer you should enter the tax issue inside the agreement.
· The deal closing condition should be clearly mentioned.
· There must be a provision stating the nature and extent of any unknown and unanticipated litigation, antitrust or other governmental problems.
· There should be condition under which the closing time and date can be change.
There are some questions which should ask by the investor company to make sure that he flushes out any concerns with the business:
· What is the exact outstanding of the company?
· The financial statements provided by the company are true and correct in all aspect under the general accounting procedures?
· The company should not have any liabilities between the First and last balance sheets.
· Company should own all of the assets it purports to own, without liens or encumbrances.
· Company’s intellectual property and products should not be involve in breaking of rights of other.
· The company’s should not be breaking any law in his business procedure.
