Share Purchase Agreement Cps

The sale and purchase of shares is often subject to compliance with one or more conditions. Why is it useful? What are the consequences of these conditions precedent with regard to the transfer of ownership and what are the consequences on the timing of transactions? What is a so-called potency disease? Can you make an acquisition dependent on due diligence results? For example, the seller may have made a specific commitment (for example. B under a shareholders` agreement) which prevents him from transferring his shares. Other common examples are a major service agreement or credit agreement that contains a change of control clause and requires the prior agreement of the other party who, in this case, has the right to terminate the contract. These clauses are standard in credit agreements with professional lenders. A clause according to which the buyer makes the conclusion of a definitive contract subject to satisfactory due diligence results can be considered a purely powerful condition, since such a clause allows the buyer to decide (exclusively) whether or not to continue the agreement. Once the agreement is signed (“signature”), it will become a final and binding agreement. However, taking into account the inclusion of one or more conditions precedent, the performance of the contract remains subject to the fulfillment of one or more well-defined future and uncertain events. In the event that one of the conditions is not met, the agreement has no impact (at least as far as the planned transfer is concerned). In accordance with the Belgian Civil Code, a fulfilled condition works retroactively. This means that the transfer of ownership of the shares is considered to have taken place at the time of signature (and not at closing). However, for most transactions, the SPA will often explicitly state that the execution of the CPs has no retroactive effect and that ownership is only transferred by the deadline (often shortly after the actual completion of the CPs). The acquisition of shares in a company subject to the condition of obtaining external financing (in order to be able to pay the purchase price) is an example of a condition that is not purely powerful (since it also depends on the party providing the external financing).

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