Stock (Shares) Purchase Agreement Template

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Updated May 19, 2022

A stock purchase agreement is between a buyer seeking to buy shares of a company for a set price from a seller. The agreement details the number (#) of shares, price ($) per share, and date of the sale. Any other terms are to be negotiated between the parties and after signature, the exchange of funds for the shares usually occurs as soon as possible.

Types of Stock (6)

  • Corporations;
  • Limited Liability Companies (LLC’s);
  • Partnerships;
  • General Partnerships;
  • Limited Partnerships; and
  • Trusts.

Table of Contents

What is a Stock Purchase Agreement?

A stock purchase agreement, or ‘SPA‘, allows someone to buy ownership of an entity through its shares of stock (corporation) or as a percentage (%) of the business (LLC). For private entities, the buyer requires to have a due diligence period. For public companies, the buyer is protected under the Securities Act of 1933 and the transaction may occur immediately.

What to Include?

  • Buyer’s Name;
  • Seller’s Name;
  • Description of Shares;
  • Purchase Price;
  • Closing Date; and
  • Due Diligence Period (if any).

Classes of Stock

Classes of stock commonly have different voting rights allowing a group of individuals make the primary decisions of the company.

For example, ABC Company has three (3) different classes of stock:

  • Class A Stock: Allows 3 votes per share.
  • Class B Stock: Allows 2 votes per share.
  • Class C Stock: Allows 1 vote per share.

How to Purchase Stock (Privately)

Purchasing stock can be completed by agreement or online depending on whether the company is publicly traded for not. For private companies, a physical stock certificate is commonly transferred and obtained by the buyer from the seller.

Step 1 – Negotiate or Place a Bid

Sign a stock purchase letter of intent or place a bid for a stock on a per-share basis. This starts the negotiating process and allows the seller of the stock to determine whether or not they would like to sell their shares.

Step 2 – Obtain Company Documents

After a letter of intent is signed, the buyer will have the right to obtain all necessary contracts, agreements, and financial reports of the company. This is known as the “due diligence period” to ensure that the seller is not misrepresenting any aspect of the business.

Step 3 – Sign a Stock Purchase Agreement

After the due diligence period, the stock purchase agreement is to be written (see How to Write) and signed amongst the parties. Once signed, the closing should occur immediately with the funds exchanged for the stock certificates. At this time the transaction is closed with the buyer being the official new owner of the stock.

Asset Purchase vs Stock Purchase

The main difference with an asset purchase agreement is the buyer is not obtaining the liabilities of the seller. Whereas, in a stock purchase the buyer is obtaining all obligations of the company in addition to its assets.

Sample

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Video

How to Write

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Step 1 –