Share Purchase Agreement in Nigeria

Share Purchase Agreement: A Guide for Nigerian Businesses

A share purchase agreement (SPA) is a legal contract used when one party wants to purchase shares in a company from another party. This agreement outlines the terms and conditions of the purchase, including details about the shares being sold, the purchase price, and any warranties or representations made by either party.

In Nigeria, share purchase agreements are commonly used in mergers and acquisitions, as well as in private equity transactions. If you are a Nigerian business owner looking to sell shares in your company, or if you are considering purchasing shares in another Nigerian business, it is important to understand the key elements of a share purchase agreement.

1. Identify the Shares Being Sold

The share purchase agreement should clearly identify the shares being sold, including the class of shares and the number of shares being purchased. It is important to ensure that the shares being sold are valid, unencumbered, and legally owned by the seller.

2. Determine the Purchase Price

The purchase price is a key element of the share purchase agreement. It should be clearly stated and may be subject to adjustments based on certain conditions, such as the company’s financial performance or changes in the value of the shares being sold.

3. Outline the Payment Terms

The payment terms for the purchase of shares should also be included in the share purchase agreement. This may include details about the timing of payments, any escrow arrangements, and any other conditions that must be met before the payment is made.

4. Address Representations and Warranties

Both the buyer and the seller will make certain representations and warranties in the share purchase agreement. These may include statements about the legal ownership of the shares being sold, the company’s financial standing, and any other material information about the business.

5. Include Indemnification Provisions

Indemnification provisions are designed to protect both parties from any losses or liabilities that may arise from the sale of shares. The share purchase agreement should include provisions that outline the scope of indemnification, including any limitations or exclusions.

6. Address Post-Closing Obligations

The share purchase agreement should also address any post-closing obligations that the buyer and seller may have. This may include obligations related to taxes, regulatory compliance, or other matters that may arise after the sale of shares is completed.

In conclusion, a share purchase agreement is an important legal document that outlines the terms and conditions of a sale of shares. If you are considering selling or purchasing shares in a Nigerian business, it is important to engage a lawyer experienced in commercial and corporate law to assist you with reviewing and negotiating the terms of a share purchase agreement. With a solid share purchase agreement in place, both parties can have greater peace of mind and confidence in the transaction.

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