The share purchase agreement is a legal agreement par excellence used to transfer the shares of a company. Its main objective is to take control of the activities of an acquired company, consisting of a large number of elements – assets, debts, organization, people – coordinated and organized among themselves to carry out a given economic activity. If the due diligence phase is satisfactorily completed, the share purchase agreement is usually signed in a private document (in legal jargon, this phase is called « signing »). However, the execution of the transaction does not usually take place; In other words, there is no effective transfer of ownership of the shares to the buyer. In the early stages of an agreement, it is not certain that the closure will be postponed. In this case, you may need to design a deferred conclusion in order to keep your options open – it would be difficult to turn an agreement from a simultaneous signing and closing structure into a deferred closing structure. But if you find that you are able to sign and conclude at the same time, I would delete the contract accordingly. It`s a little different if the transaction follows the account closure mechanism. Under a closing mechanism, the economic transfer is made at the time of closing, and not retroactively to the balance sheet date. If an M&A transaction contains conditions that must be met before the actual conclusion of the transaction, the signature and conclusion do not take place on the same date. In this case, the conclusion is delayed – and therefore the right to gain. On the contrary, this article has only a general purpose of information.
They should not act on the basis of the information contained in this Article or refrain from acting. Instead, you should turn to a qualified lawyer for unique advice for your particular situation. Given the uncertainty between both parties, the time interval between signature and conclusion should be as short as possible. In addition, the agreed rights of withdrawal and performance requirements should be kept to a minimum. If the closing takes place after the signature, the contract usually contains obligations that must be fulfilled before the conclusion, conditions that must be fulfilled before the parties are obliged to conclude the transaction and termination clauses. These additional elements complicate matters considerably. It would be unfortunate to use a deferred closing structure for an agreement that uses simultaneous signing and closing – you would spend time building a sophisticated structure that would ultimately prove not only useless, but also add a confusing mess. It should be borne in mind that it is possible that a signature and a closure take place in the same act and not at different times. . .