When it comes to buying and selling businesses, one of the easiest ways to transfer ownership is by selling the company`s shares. This is because, while ownership of the business may change, the day-to-day operations of the business continue, with employees, contracts and real estate remaining in the business. A company may exchange shares by buying them back from existing shareholders (share repurchase agreement) and handing over the shares on behalf of the company. This is especially the case for established companies. As a general rule, it is only made where the group has enough cash to make the purchase while covering the operating costs. The cashing of shares transfers equity to the group, which increases the value of the remaining shares. Various provisions are an integral part of a well-developed agreement. Many embellish these terms and consider them a standard boiler platform when they are actually important. It is a place where lawyers can store terms that could be overlooked. In principle, share transfers to UK limited companies will generally involve a two-step process. First, the buyer and seller enter into a sales contract, often called a share purchase agreement, when they agree on the price for which the shares are sold and the other terms of sale. On the other hand, the “tag along” clause does not regulate the obligation of the minority shareholder, but a right. If the majority shareholder sells its shares, the minority shareholder has the right to “tag-Along”.
They therefore have the right to sell their stake on the same terms as the majority shareholder. Since an investor only wishes to buy a certain number of shares, the minority shareholder may join the agreement on a pro-rata basis, i.e. as a percentage of the share before the sale. Representations, guarantees and commitments made in a G.S.O. should survive the execution and delivery of the OSG and the closing of the transaction, beyond the closing of the transaction. Some misrepresentations and breaches of the warranty may not be visible until after completion. The survival of representations, guarantees and pacts (as well as compensation terms) beyond the conclusion of the transaction protects the buyer if he receives less than he negotiated. However, the parties should carefully consider the existing legislation of the OSG to determine how the jurisdiction assesses and imposes statutes of limitations.