Company Share Sales and Purchases Solicitors in Scunthorpe & Goole
When all of the shares in a company change hands, the whole business is transferred, including its assets and liabilities. The buyer therefore needs to conduct careful due diligence to ensure that they are fully aware of what they are taking on.
The seller will be required to give a number of warranties and indemnities to the buyer in respect of the company and its affairs and to agree to restrictive covenants.
This means that company share sale and purchase agreements will need careful negotiation and consideration by both parties before they are signed.
Very often, a business sale will also include property elements, such as the transfer of an office or industrial unit, or the assignment of a lease. We have specialist Commercial Property team with experience of advising on the property aspects of business sales.
At Symes Bains Broomer, our expert company and commercial solicitors can advise and represent you throughout the sale or purchase of a business to ensure that your rights and interests are protected. We have local teams in Scunthorpe or Goole and work with clients across Lincolnshire and Yorkshire.
If you would like to have an initial no-obligation conversation, please call us on 01724 281 616.
What our company share sales solicitors can do for your business
Selling company shares generally involves negotiation between the buyer and seller about the terms of the business purchase agreement. Our company and commercial team can work with you to ensure that the deal you achieve is the best that it can be. The areas in which we will negotiate include the following:
Share purchase agreements
The share purchase agreement will include clauses to protect the buyer from existing liabilities as far as possible. It is important that these provisions are carefully drafted to ensure that they are legally enforceable. For example, if a restriction is too wide, then a court could potentially decide that it is unreasonable and not valid.
A robust share purchase agreement is important for both the buyer and seller and should be tailored to the particular deal it covers to ensure that risks are limited and known. We can ensure that any agreement reached is legally valid and protects your position. Generally, several drafts of a share purchase agreement will be needed as the two parties negotiate and make amendments to reach a final agreed copy.
Due diligence on share purchases
The buyer will want to carry out extensive investigations into the state of the business and its financial, tax and legal affairs before agreeing the details of the purchase. If you are selling a company, you will need to go through all of their enquiries and provide accurate replies along with copies of relevant documentation, such as accounts and contracts.
Nowadays, documents disclosed as part of the due diligence process are usually uploaded electronically into a virtual data room, and access granted to the relevant legal, tax and property advisers. We can assist with the disclosure process – essential for limiting a seller’s risk.
We can help you with any technical or legal questions that may arise and ensure that your responses do not expose you to legal difficulty later on.
Guarantees and indemnities for share sales
Guarantees or warranties are statements by the seller in respect of the state of the company that the buyer is entitled to rely on. This is confirmation that the information provided is accurate in respect of issues such as company accounts, employment records, tax information, ownership of land, buildings and other assets, to include intellectual property and ongoing legal disputes.
The seller will also be required to provide indemnities to the buyer in respect of potential liabilities. For example, an indemnity is usually given in respect of claims made by employees or for other legal claims made in respect of something which happened before the date of completion of the sale.
Both guarantees and indemnities can be onerous and we will work to reduce your exposure and liability, agreeing on terms that protect your position as much as possible. A Disclosure Letter will be carefully drafted on behalf of a Seller, in which appropriate disclosures will need to be made against the warranties contained in the Purchase Agreement.
On a business sale, the seller will be bound by the restrictive covenants contained in the share purchase agreement. These are clauses preventing certain activities from being carried out that could be damaging to the company, such as setting up in competition or soliciting clients or customers.
These clauses must be carefully drafted to ensure that they will be legally enforceable by the court should a dispute arise. If they are too wide, then the court will not uphold them.
When a contract is clear, well-drafted and unambiguous, it can often reduce the likelihood of a legal challenge. We have extensive experience in drafting watertight contract clauses that will protect you from claims in relation to the sale of your business and will be upheld by the courts.
Common questions about company share sales and purchases
How much tax do you pay on share sales?
If you make a gain when you sell shares, you will be required to pay Capital Gains Tax (CGT) on the gain. This is payable at the rate of 10% or 20%, depending on your tax band.
In some instances, you may qualify for Business Asset Disposal Relief, formerly known as Entrepreneurs’ Relief, which means that the Capital Gains Tax rate will be 10%.
Tax issues, including valuing shares, can be complex, and it is sensible to seek legal and accountancy advice to ensure that liabilities are calculated correctly.
What is a stock transfer form?
To formally complete a company purchase, a stock transfer form must be completed and registered with HM Revenue & Customs. Ad Valorem Stamp Duty must be paid by the purchaser at the rate of 0.5 per cent of the amount paid for the shares.
The form will not be stamped until the Stamp Duty is paid, and registration of the transfer of shares will not take place until the stock transfer form has been stamped, so it is vital to deal with this immediately upon completion of the business acquisition.
What is a share transfer agreement?
Share transfer agreement is another phrase for a share purchase agreement (see above).
Our company share sales advice fees
We offer a range of flexible pricing options to suit your business’s needs and budget, including fixed fee arrangements where appropriate.
Our company and commercial solicitors will be happy to provide a realistic estimate of costs at the outset and will always keep you up to date about the cost of any ongoing legal work we carry out for you.
Contact us about a company share sale or purchase
If you are contemplating a share sale or purchase and you need to discuss your options with one of our expert company and commercial solicitors, please call us on 01724 281 616, email us at email@example.com or fill in our Enquiry Form.