Why do I need an Agreement for Sale and Purchase of Shares?
This agreement contains all the essential terms for the sale of all or a majority of the shares in a privately owned New Zealand company by one or more shareholders. If only one shareholder is selling a minority shareholding in a company, you need our Agreement for Sale and Purchase of Shares (one minority shareholding).
Recording the key terms of the share sale in a written agreement ensures both parties clearly understand what shares are being sold, how much the buyer is paying and when payment is due, what consents, approvals or conditions need to be obtained or satisfied, and the requirements and process on completion. Using our agreement for sale and purchase will also give the buyer assurance about the ownership and status of the shares and the company’s assets through various statements made by the sellers in the agreement (known as warranties). If these warranties are found to be inaccurate, the buyer may have a legal claim against the seller. A seller will want to limit its potential liability for these claims.
A simple, clear and well-drafted agreement for sale and purchase reduces misunderstandings and potential disputes.
What’s in an Agreement for Sale and Purchase of Shares?
NZ lawyers have created this agreement for use by NZ businesses. It is comprehensive but easy to understand, without unnecessary legalese, and fair to both sides, to reduce negotiation time and keep the relationship positive. It is also flexible, so you can customise it to your particular deal.
The agreement sets out all the essential terms of a typical share sale and purchase transaction, such as purchase price, timing of payment, optional working capital adjustment, conditions, director resignations, optional handover assistance terms, warranties and liability limitations and optional non-competition and non-solicitation restraints.
This agreement is designed for common share sale scenarios. It does not cover some of the more complicated arrangements (such as escrow arrangements, earn-out arrangements, deferred or staged payment of the purchase price, a guarantee of seller's obligations, or where the company (whose shares are being purchased) is part of a group of companies). If your share sale transaction is more complicated, your agreement will need further customisation from a lawyer - see 'What if I need help?' below.
How long will it take to create my document?
15-25 minutes – anywhere, anytime! During the Q&A you can save your progress to come back later, or repeat the Q&A to change an answer or produce a new version of a document.
What information do I need to complete the Q&A?
- The name and contact details of the seller(s) and buyer
- Shareholding details for each seller
- Purchase price, and payment terms (will a deposit be paid?)
- Whether the price will be adjusted for change in working capital from the date of the agreement to the completion date, and if so, what is the ‘target’ working capital the purchase price is based on
- Conditions – such as due diligence, buyer finance, landlord consent or key customer/supplier consent and the date these conditions need to be met
- Completion date (also known as settlement date)
- Handover assistance terms – (eg. whether (and for how long) the seller will provide help after the sale)Optional non-competition and non-solicitation terms – will the seller be prevented from competing with the business or encouraging clients or staff to terminate or reduce their dealings with the business for a fixed time (and in a certain area) after completion.
What if I need help?
On Your Terms has teamed up with Luminate Legal to offer its customers the option of obtaining legal advice from a lawyer to provide extra assurance and peace of mind. If you would like to ask a lawyer some quick questions about your document (or your responses to the Q&A), or have your document reviewed/edited by a lawyer, click here to view and select Luminate Legal's packages and fixed-fee pricing exclusively for On Your Terms customers.
What do I do once my Agreement for Sale and Purchase of Shares is created?
As soon as you download the agreement, it is ready to be signed (or negotiated and then signed). Your document will be in Word, so you can amend it if necessary.
Other helpful information:
- Check out our blogs: How to transfer shares in a New Zealand company, Selling Up Shop: What happens to employees when a business is sold?
- You may also find these bundles or documents useful for your business: Company Constitution Mutual Confidentiality Agreement, Term Sheet for Sale and Purchase of Shares (all or majority), Agreement for Sale and Purchase of Business and Assets, Transfer Of Company Shares and Approvals Bundle, Shareholders' Agreement
- Check out our FAQs
If you’re unsure whether this agreement is what you need, reach out to us at hello@onyourterms.co.nz – we’re happy to help!
If you’re not satisfied with your purchase of this product for any reason, let us know why within 10 days of your purchase and we’ll work with you to make sure you’re happy, including giving you a full refund if necessary.
Disclaimer: On Your Terms was created to provide fast, easy and affordable access to legal information and documentation. We are not a law firm and do not provide legal advice. The information and documents we provide are of a general nature, designed for common situations, and may not be suitable for your needs or circumstances. If you need legal advice, we have a network of specialist law firm partners able to help you here.