A share purchase agreement or stock purchase agreement is a form of an agreement signed between two parties, namely the seller and the acquirer, for the purpose of selling the particular number of shares that the seller holds in a company. The main objective of this document is the terms and conditions agreed by both parties. This agreement specifies the consideration provided for the shares, the number of shares to be sold, condition precedents, and covenants by the parties. If a corporation or an individual is buying or selling shares they must use a share purchase agreement. A share purchase agreement can also be used to buy the shares of a business partner who has left the business.

The documents act as legal protection for both the parties involved and protect their interests. This document covers all the aspects of a transaction; therefore both the parties must examine the clauses mentioned in the document before signing and agreeing to it. A share purchase agreement is an essential business practice, and breach of any of the conditions mentioned in the agreement or the breach of agreement as a whole would lead to several unwanted legal consequences.

Some of the essential points that are mentioned in a share purchase agreement:

1. Name of the company whose stocks or shares are being sold
2. Name of the buyer of the shares
3. Par value of the shares
4. The number of shares being sold
5. Indemnification agreement for unforeseen costs
6. The place and time of the transaction and other required information.

A letter of intent is made before the share purchase agreement is finalized. The duty of the buyer is to perform due diligence and to check that the contents of the letter of intent and the share purchase agreement should be the same. For the seller, the important sections to look into are the sale and purchase and the warranties and representation section. The terms of the sale and purchase clause should be on the same line as mentioned in the letter of intent. The warranties and representation section needs to be check so that no untrue statements are to be found. If there are any untrue statements mentioned, then there are possible legal actions and recourses which one could opt for. If any purchase price adjustments are done after the transaction takes place, then in such situations the seller may have to reimburse the buyer for the misrepresentation caused.  

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.