A stock purchase agreement is a contract under which a seller transfers stock of a corporation to a buyer.
Although the content of a stock purchase agreement may vary in complexity depending on the sophistication of the transaction, it commonly includes the following sections:
- Recitals that describe the relevant background of the transaction.
- A list of definitions of the words that shall rule the interpretation of the stock purchase agreement.
- The terms and conditions for the sale and purchase of the stock including the purchase price and the terms and conditions for its payment.
- The terms and conditions for the closing of the transaction, such as the need to require any previous governmental authorization (i.e., antitrust authority).
- The representations and warranties of the seller and the buyer regarding, among others, their authority to enter the stock purchase agreement, the legal characteristics of the sold stock, the legal and financial information and the obligations of the company, and any other relevant matter related to the transaction, the company and the stock.
- Post-closing obligations of the parties, such as a non-compete or non-solicitation clause.
- The indemnification rules, such as the procedure for indemnification, maximum indemnification limitations, prohibition for double compensation, and third-party claims.
- Rules for the termination of the stock purchase agreement.
- Other miscellaneous clauses, such as applicable law and jurisdiction, arbitration clause, and other interpretation rules.
A stock purchase agreement may also be called a “share purchase agreement” or referred to as “SPA”.
[Last updated in July of 2021 by the Wex Definitions Team]