Sample Share Buy Back Agreement

If the reserve currency is used, the shares must be purchased at face value. When a premium is paid, it must be made using distributable profits, unless the shares were initially sold with a premium, the premium can be paid with the proceeds of a new issue. A share buyback can be used as an alternative or as a complement to the issuance of dividends as a means of delivering corporate profits to shareholders. After a share buyback, since there are now fewer residual shares, these shares will achieve a higher earnings per share. There are strict legal requirements that must be met. If the company is a private company, the repurchase can be financed by the following use: reference to Term 12 (oppositions) – This clause provides that parties to the share repurchase agreement can execute separate copies (i.e. sign) instead of all parties signed the same copy of the agreement. The use of a counter-party clause is recommended for security reasons and to avoid any argument that the agreement is not binding because it has not been executed properly. The clauses of the boiler platform are often standard, and most are generally not heavily negotiated. However, they are important because many contractual disputes depend on the development of modular clauses such as whole contractual clauses. You need to change paragraph 3.2 to add yellow the text relevant to your business. The wording depends on whether the shareholder agreement has not yet been obtained.

Note of Clause 10 (agreement survives completion) – This clause is used to confirm and clarify that certain obligations arising from an agreement that will not be met at the time of a particular transaction must be maintained and fulfilled once they have passed. This clause is primarily intended for clarity and security and is not an essential element of an agreement. If the survival of the final clause is not included in the construction provisions, it is not fatal to the existence of commitments in the agreement that have not yet been concluded. Our model contains the main conditions that govern the repurchase of shares, such as the name of the selling shareholders, the number and class of shares sold and the price to be paid for the shares. Note that it is possible for public and private companies to repurchase their shares, but our model has been established with a private company limited by shares. Clause 1 (Interpretation) paragraph 1.1 contains the definitions applicable throughout the share repurchase agreement. Clauses 1.2 – 1.8 are standard interpretation clauses used in most commercial contracts. House and HMR-C should be informed of the transaction. Stamp duty should be paid on the purchase price if the shares have been purchased for more than a nominal amount. A share repurchase agreement is a contract between a company and one or more of its shareholders, under which the entity may repurchase a portion of its own common shares. The document identifies the parties involved and records the total price of the participation, the method of payment and the date of the transaction. The contract also includes assurances and guarantees on behalf of both parties, with the general effect that they are each legally able to continue the transaction.

Clause 4.2 implies that both parties promise each other that they will have the power and authority to conclude the agreement by the date of this agreement and that they will be able to execute and provide the agreements and documents in question. A company buys back its shares from the market because the company`s management believes that the shares currently on the market are undervalued. By buying back a portion of the shares, the company can increase the value of all remaining shares.