Stock (Shares) Purchase Agreement Template

Create a high quality document online now!

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

  • 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 a business entity. The purchase can be either in shares of stock or as a percentage. 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

Download: Adobe PDF, MS Word, OpenDocument

How to Write

Download: Adobe PDF, MS Word, OpenDocument

Step 1 – Download The Stock (Shares) Purchase Agreement

When it is time to develop the agreement needed to solidify a stock purchase, locate the “PDF,” “Word,” and “ODT” buttons on display in the preview image’s caption area or the “Adobe PDF,” “MS Word,” and “OpenDocument” links above. All items mentioned here can be used to download the desired template in the format or file type acting as that link or buttons label. Select the template version you wish then save it to your system or cloud in an accessible folder.

Step 2 – Set This Agreement To A Specific Date

This agreement’s introduction will seek the date you wish this paperwork applied to the participating Parties supplied to its content. In article “I. The Parties,” enter the month and calendar day in the presented statement between the word “Of” and the number “20” then complete this information with the appropriate two-digit year on the next line. 

 

Step 3 – Produce The Purchaser’s Identity

The Purchaser of the concerned shares of stock must be identified to this Party’s role. Locate the bold word “Buyer” then input the legal name of the Stock Purchaser on the blank line that follows. Next, record the mailing address of the Stock Purchaser by furnishing its components across a few spaces. First, report the building number and the street name or number along with any needed unit number or PO Box in the Stock Purchaser’s mailing address on the blank line leading to the term “City Of,” then enter this mailing address’ city on the available line.  Close this address by entering the name of the State where the Purchaser’s address as directed on the empty line just before the parentheses label “(Buyer).” 

 

Step 4 – Attach The Seller’s Information

The next part in “I. The Parties” is labeled “Seller.” The first blank space here requires the full name of the Entity with the authority to sell the concerned shares to the Purchaser. Enter this Party’s name as requested immediately after the bold label “Seller.”  As with the Purchaser, the Seller’s mailing address must be attached to this Party’s name. To achieve this, record the Seller’s building number, street, and unit number or P.O. Box on the blank line between the language “…With A Mailing Address Of” and the phrase “City Of.” This must be followed with a report of the appropriate city name for this address on the next blank line.  This address must be completed with the name of the state where it is found. Name the Seller’s mailing address State on the final blank space of this section. 

 

Step 5 – Define The Entity Behind The Shares The Purchaser Shall Buy

The next section of this document, bearing the title “Description Of Shares,” seeks several details for its completion. The first of which is the full name of the “Business Entity” whose stock is being sold. Locate the blank line labeled “Entity Name” then furnish this report as requested.  Continue down the second article to the line labeled “Entity Mailing Address” then furnish the Stock Company’s full address (building, street, suite number, city, state, zip code). Note, this must be the formal business address for the Company whose stock is being sold meaning that any official notices or business mail should be directed when contacting this Entity. The “State Of Incorporation/Organization” requires the name of the State where the Stock Company was legally incorporated. This is the state whose laws will apply to the Stock Company’s behaviors and finances. 

 

Step 6 – Provide A Discussion On The Concerned Shares

Article “II. Description Of Shares” continues with some requests that shall define the concerned stock. First, record exactly how much money is required to purchase one share of this stock on the blank line between the dollar sign and the phrase “/Share.” Now, record the “Number Of Shares” to be purchased on the next blank line  Finally, name the “Class/Series” the shares being bought are classified under by the Stock Company on the last blank line in the “II. Description Of Shares” section.

 

Step 7 – Attach The Formal Asking Price For The Shares Of Stock

The third article in this agreement, “Purchase Prices,” expects the amount of money expected for all the shares being sold. This requires that a multiplication of the “Number Of Shares” reported above be multiplied by the documented “Price ($) Per Share.” Once this task is complete, write out the resulting figure on the blank line before the word “Dollars” and furnish it numerically to the line in the parentheses. It should be mentioned the amount you define here will be expected from the Purchaser on the closing date of this agreement.

 

Step 8 – Solidify The Closing Date Through this Agreement

The calendar date that defines the last day when the Purchaser can buy the stock under these terms must be discussed. For this effect, produce the month and two-digit calendar day on the first blank line in the section “IV. Closing Date.”    The second blank line of this section shall call for the two-digit calendar year of the closing date. Enter this numeral as requested to confirm the stock purchase closing date.

 

Step 9 – Report The Manner Of Payment Expected For These Shares

The way the Seller should expect to be paid must be included in the “IV. Closing Date” section. This information can be easily conveyed through a series of checkboxes. You may check one or more of the lists provided in this section so long as it defines how payment for the stock will be received. Thus, if the money will arrive in the form of a “Bank Wire” then check the first box.  If the stock will be paid for in “Cash,” mark the second box.  The third box should be marked if the Purchaser will submit a check to pay for the shares defined above. Mark the fourth checkbox to indicate the Purchaser will use “PayPal” for this transaction.  In a case where none of the above methods can be applied to part or all of the Purchaser’s payment method, then mark the “Other” box. This will expect a direct report to define how the Purchaser will submit the payment for the concerned stock. In the example below, the Seller has arranged for a money order therefore, “Money Order” along with the appropriate transaction number is listed in the available area.

 

Step 10 – Discuss The Deposit Status For The Intended Stock Purchase

The fifth section, under the title “V. Deposit,” presents two checkbox choices that can potentially define whether or not a deposit is required before the purchase is made. One of these must be chosen and applied so the other may be discounted as inapplicable. If a deposit must be submitted before the closing date, then mark the box labeled “Requires” and record the dollar amount (numerically) of the expected deposit on the blank line after the dollar sign.  If a deposit is required, then continue to the next blank line (preceding the term “Calendar Days”). Here, you must supply the number of days after this agreement’s date of effect when the deposit amount defined above must be submitted by the Purchaser.  If no deposit is required, then leave the first box unattended and mark the second checkbox (corresponding to the term “Does Not”) to indicate the Purchaser will not be burdened with submitting any deposit amount before the closing date. 

 

Step 11 – Indicate If A Due Diligence Period Will Be Applied To This Purchase

In some cases, a period when a review of the stock’s health may need to be undertaken by the Purchaser. This research is considered the “Due Diligence Period” which is the title of the sixth section. If the Seller and Purchaser agree that a time frame should be allowed for such research, then mark the first checkbox in this section.  The exact calendar date and time when due diligence ends must be recorded. This is when the Purchaser must submit his or her decision on whether this transaction will proceed. Document the discussed month and calendar day on the line following “…Buyer Shall Have Until” then record the appropriate calendar year on the next empty line. Once done, set the final time of that day when the Purchaser decision to buy or terminate must be given using the formatted lines that follow the word “At” to do so.  Finally, complete this choice by choosing the box “AM” or “PM” to further define the time recorded above.  In the example below, the box checked is “AM” to complete this statement’s condition that the Stock Buyer or Purchaser is given until 9:00 AM. on March 1, 2020, to state the results of his or her due diligence.  If no consideration for due diligence will be required for this agreement to proceed then mark the checkbox labeled “Does Not” in section “VI. Due Diligence Period.”

 

Step 12 – Attach This Document To The Appropriate Jurisdiction

The next portion of this agreement requiring discussion is “XI. Governing Law.” The blank line in this article requires the State whose laws will apply to this transaction and the behavior of the two involved Parties. 

 

Step 13 – Complete The Stock Transaction Provisions As Needed

The blank lines in “XIII. Additional Terms & Conditions” seek any additional information that must be included in this agreement but thus far unaddressed. All such additions or limitations should be compliant with state and federal laws. If there are no additional provisions, terms, limitations, or considerations then it is strongly recommended this fact be shown by entering the word “None.” This will mean only the statements discussed in this agreement (with no additions) will apply to the stock purchase.

 

Step 14 – Secure The Purchasing Entity’s Signature

Both Parties must read the agreement and any additions or attachments named in Article “XIII. Additional Terms & Conditions.” If the Stock Purchaser agrees to the contents of this agreement, then he or she must locate the “Buyer’s Signature” line after Article “XIV. Entire Agreement” and sign it. Immediately after this act, the Signature Buyer must enter the current “Date” on the next line.  The Purchaser or Buyer must also supply his or her printed name on the final empty line of this section. 

 

Step 15 – Produce The Seller’s Signature

Similarly, if, after reviewing the completed document above and any formally added or attached material, the Seller must sign his or her name as a promise to comply with its contents. This signature should be produced on the “Seller’s Signature” line. The Seller must also “Date” his or her signature by recording the current month, day, and year of the signing on the adjacent line. After signing and dating this document, the Seller should also print his or her name on the “Print Name” line.