Purchase & Sale of Shares / Assets

The right counsel could save you money and help you avoid frustrating mistakes when engaging in any sale or purchase of assets or shares. These transactions can be extremely complicated and may come with consequences stretching many years into the future, so these decisions should never be made without the insight of counsel to help you. Make sure that you know your rights and responsibilities in this process and that you have a lawyer dedicated to the best possible outcome for you.

Identifying another company and purchasing it or purchasing shares is an important process that should be overseen by a knowledgeable attorney. There are typically three different ways that the acquisition of a privately held Canadian business can occur. These include:

  • The purchase of shares
  • Statutory amalgamation
  • The purchase of assets

Although privately negotiated acquisitions are typically exempt from securities, legislation, takeover bid provisions, these can still generate unique securities law concerns and this may prompt interacting with an experienced business lawyer. The primary features of most Canadian share purchase and asset purchase agreements should be crafted or reviewed by an experienced attorney.

It is critical to identify whether or not the purchase will occur via shares or assets for both tax considerations as well as non-tax considerations. Certain liabilities may be left with the seller of the company or with the purchaser of the company and it is important that all parties understand their role at the outset.

Share sales frequently simpler from a canvassing perspective and employment issues perspective and it also typically requires fewer third party consents. There are also tax considerations associated with purchasing a company’s assets or shares. A knowledgeable outside lawyer can read the current agreements and determine how they will influence all parties and provide specific guidance to someone who is thinking about purchasing a company.

FAQ Purchase & Sale of Shares / Assets

What is a share sale and purchase agreement?

A Share Sale and Purchase Agreement is an agreement for the sale and purchase of a stated number of shares at an agreed price. The shareholder selling their shares is the seller and the party buying the shares is the buyer

Can you sell shares without a broker?

You can generally buy and sell stock without a broker if you trade directly with the company issuing it through a direct stock purchase plan. You will need to quote your SRN which is shown on your holdings statement sent by the registry on behalf of the company.

Can I buy shares today and sell tomorrow?

You can easily sell the shares tomorrow bought today. It is popularly known as BTST trade (Buy Today Sell Tomorrow).

What is a sale of business assets document?

A sale of business assets document is a legal document that states that the seller has an obligation to sell the product, asset or property in question. It also says the interested buyer is obligated to purchase the product.

Why does asset price need to be allocated?

The assets to be included in the purchase of a business should be specified to ensure that there are no misunderstandings regarding what is to be included or not included in the sale.

What does statutory amalgamation mean?

An amalgamation is a combination of two or more companies into a new entity. Amalgamation is distinct from a merger because neither company involved survives as a legal entity. Instead, a completely new entity is formed to house the combined assets and liabilities of both companies.

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