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Contract Of Sale Of Shares for the United States

Contract Of Sale Of Shares Template for United States

A Contract of Sale of Shares is a legally binding agreement under U.S. law that documents the transfer of ownership of shares from a seller to a buyer. The agreement outlines the terms and conditions of the sale, including the purchase price, number of shares, warranties, and completion mechanics. It must comply with federal securities laws, state-specific regulations, and may require SEC registration or exemption depending on the transaction size and nature.

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Contract Of Sale Of Shares

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What is a Contract Of Sale Of Shares?

The Contract of Sale of Shares is a crucial document used when transferring ownership of company shares in the United States. It serves as the primary instrument for documenting share transactions, whether for private or public companies. The agreement must comply with both federal securities laws (including SEC regulations) and state-specific requirements. It typically includes detailed provisions about the transaction structure, representations and warranties, conditions precedent, and completion mechanics. This document is particularly important for maintaining clear records of share ownership and ensuring regulatory compliance in corporate transactions.

What sections should be included in a Contract Of Sale Of Shares?

1. Parties: Identification of buyer(s) and seller(s), including full legal names and addresses

2. Background/Recitals: Context of the transaction, including company details and reason for sale

3. Definitions: Key terms used throughout the agreement

4. Sale and Purchase: Core transaction terms including number of shares, price, and class of shares

5. Consideration: Payment terms, method, and timing

6. Completion: Details of closing process, timing, and deliverables

7. Seller's Warranties: Standard warranties regarding share ownership and authority to sell

8. Governing Law: Applicable jurisdiction and dispute resolution

What sections are optional to include in a Contract Of Sale Of Shares?

1. Conditions Precedent: Conditions that must be met before completion - used for complex transactions or regulatory requirements

2. Non-competition: Restrictions on seller's future activities - used when selling controlling interest

3. Tag-along Rights: Rights of minority shareholders to join the sale - used in partial stake sales

4. Drag-along Rights: Rights to force minority shareholders to join the sale - used in majority stake sales

What schedules should be included in a Contract Of Sale Of Shares?

1. Schedule 1 - Share Details: Detailed description of shares being sold including share certificates

2. Schedule 2 - Company Information: Key company details including financial statements

3. Schedule 3 - Warranties: Detailed warranties and representations

4. Schedule 4 - Disclosure Letter: Exceptions to warranties

5. Schedule 5 - Board Resolutions: Corporate approvals for the transaction

6. Schedule 6 - Regulatory Approvals: Copies of required regulatory clearances

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓÆµ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

United States

Document Type

Security Agreement

Cost

Free to use
Clauses






























Industries

Securities Act of 1933: Federal law requiring registration of securities offerings and mandating disclosure requirements for public offerings

Securities Exchange Act of 1934: Federal law governing secondary market trading of securities and establishing the SEC

Blue Sky Laws: State-specific securities regulations that must be complied with in states where sellers/buyers are located

Delaware General Corporation Law: Comprehensive set of laws governing corporate affairs for Delaware corporations, often relevant as many US companies are incorporated there

State Corporation Laws: Laws specific to the state where the company is incorporated, governing corporate structure and operations

Internal Revenue Code: Federal tax regulations affecting share sales, including capital gains implications and tax reporting requirements

UCC Article 8: Uniform Commercial Code provisions governing investment securities and their transfer

UCC Article 9: Uniform Commercial Code provisions governing secured transactions and security interests in shares

Hart-Scott-Rodino Act: Federal law requiring antitrust review for larger transactions meeting certain thresholds

CFIUS Regulations: Requirements for review of foreign investments in US companies that may affect national security

FIRRMA: Foreign Investment Risk Review Modernization Act expanding CFIUS jurisdiction over foreign investments

State Contract Laws: State-specific laws governing contract formation, enforcement, and interpretation

Statute of Frauds: Legal requirement that certain contracts, including those for the sale of securities, must be in writing to be enforceable

SEC Rule 144: Regulations governing the sale of restricted and control securities, including holding period requirements and volume limitations

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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