Stock Purchase Agreements

Written by Kathleen Gagne
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When you allow stock purchase agreements, you are selling a portion of your company to each person or entity that buys one or more shares. It is important that you use legally valid stock purchase agreements when you take this step. If there are flaws in your agreement, you may be liable for damages to a greater extent if any problems or disputes arise.

Stock Purchase Agreements Elements

As with all legal documents affecting your business, you should have your attorney check out any stock purchase agreement you are thinking about buying on the Internet. Basic stock purchase agreements are probably the safest ones to use as long as they cover all the essential elements such as distinguishing between common and preferred stock. Your stock purchase agreement documents must describe in detail the rights and obligations of the company and of the new shareholder.

At the top of the agreement, it should display the kind of stock to be purchased and the number of the specific shares. Next, you should see the name of your corporation and the number of shares issued to the new shareholder under the agreement. Following that, the form should detail the action represented by the agreement and where the shares may or may not be transferred. It should also explain limitations on the shares.

All stock purchase agreements should be signed and witnessed and should contain information about transferring the shares. If you have never owned or sold stocks before, it's a good idea to purchase a copy of a small business guide that includes details on how to handle the process of selling shares of your corporation.


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