Unlock the Power of Online Signature Legality for Business Purchase Agreements in Canada

How to eSign a document: online signature legality for Business purchase agreement in Canada

hi this is gary from rod cop law welcome today my client asked me what i should be looking for at in a share purchase agreement also known as the stock purchase agreement basically this is a contract that says you're purchasing certain shares in a company or perhaps selling shares in a corporation now you want to make sure you nail down the vital terms to the agreement right what are you buying you're buying a certain number of shares what's the number and what percentage of the company does that equate to how many total shares uh in the company are outstanding uh what are the categories of shares does the company have preferred shares or only common shares does do the shares you're purchasing come with voting rights now we're talking about what you're buying how much are you paying what is the price per share what's the total uh price that you you have to pay on the closing date speaking of which you want to date the contract but you also want to have a secondary date and that's the closing date that's the date when the shares will trade hands and you're also expected to pay for said shares now the reps and warranties or representations and warranties are not to be confused with the recitals the early part of the contract talks about what the contract is this is the recital section it's unenforceable and not crucial to the contract the reps and warranties are these say for instance that the seller has authority to enter into the transaction the reps should also state that the company is not party to a lawsuit and is not expected to be sued by any third party an employee or anyone else you do not want to purchase a lawsuit finally you want to know that the company is in good standing meaning that doesn't have any debts to the government for instance skip down to the signature line you want to make sure that the corporation itself is party to the agreement and somebody or one of the executives of the corporation that has authority to sign has signed off on the agreement you want this to make sure that the company is following its internal guidelines and to that end you want to request a copy of its articles bylaws and the shareholder agreement to make sure that those documents are consistent but also that the purchase the share purchase agreement is consistent with the company's own internal documentation next you you're going to want to look at a sec compliance statement or a letter and this should be a letter from an attorney that says that the transaction is compliant with sec rules now remember the buying and selling of equity in a corporation like this is a security regulated by the 33 and 34 act so you're going to want to fall into either an exception or an exemption so that you don't have to fulfill all the prospectus requirements and so forth the opinion letter should explain that look for the stock certificate to be exchanged and executed so it should have a transfer uh signature from the authorized signatory in the company and that should be an executive usually a secretary and maybe a vp or president as well finally you're going to look to the share log this is something you should do as part of your due diligence this isn't the whole thing but it's part of it and that share log should say who the shares have previously belonged to and finally record that transaction to you thank you uh for listening to the video and and watching and if you have any questions i do welcome your call gary rodkop business attorney