{"componentChunkName":"component---src-templates-blog-post-ts","path":"/overview-of-share-transfer-agreement/","result":{"data":{"site":{"siteMetadata":{"title":"Clausehound Blog","author":"Joshua Koudys"}},"markdownRemark":{"id":"00e56eaa-80bf-5940-b133-bd2e8adec7c1","excerpt":"What is this document? A Share Transfer Agreement is an agreement that transfers shares from the vendor, to a purchaser corporation in exchange for shares in…","html":"<h3>What is this document?</h3>\n<p>A <strong>Share Transfer Agreement</strong> is an agreement that transfers shares from the vendor, to a purchaser corporation in exchange for shares in the purchaser corporation.</p>\n<h3>When would I use this document?</h3>\n<p>A Share Transfer Agreement can be used in conjunction with a <strong>share purchase agreement</strong> and a <strong>subscription agreement</strong>, when the payment for the vendor’s shares is made with shares of the purchaser corporation (the ‘consideration shares’). This type of transaction is common in estate planning as part of a “rollover”.</p>\n<h3>Who Signs this Agreement?</h3>\n<p>The vendor and purchaser corporation both sign this agreement.</p>\n<h3>More details about this document</h3>\n<p>The transfer is essentially an exchange of vendor shares (the ‘<strong>transfer shares</strong>’) for shares in the purchaser (the ‘<strong>consideration shares</strong>’).</p>\n<p>This can be part of an <strong>estate freeze</strong>. If so, the agreement will contain clauses stating the intention of the parties to comply with the tax legislation, and providing for a price adjustment mechanism in case the taxing authority later finds that the value attributed to the shares was inaccurate. The agreement would also have clauses giving a power of attorney to the corporation to make all necessary elections to comply with tax laws.</p>\n<p>If the transfer is not being done for tax purposes, the clauses dealing with compliance with the tax legislation will be omitted from the agreement.</p>\n<h3>What are the core elements of this document?</h3>\n<p>The core elements of a Share Transfer Agreement include: Background, definition of Transfer Shares, definition of Consideration Shares, Date of Transfer, Purchase Price, Payment, Liability, Creditors, Representations and Warranties, and Closing.</p>\n<p>A Share Transfer Agreement used in a <strong>“rollover”</strong> can include Necessary Acts, Tax Elections and Filings, Price Adjustment, Power of Attorney.</p>\n<h3>Related Documents</h3>\n<ul>\n<li><strong>Shareholders’ Resolution</strong> - in privately held companies a resolution of the shareholders approving the transfer of the shares might be required</li>\n<li><strong>Directors’ Resolution</strong> - the share transfer will need to be ratified by the directors of the corporations whose shares are transferred</li>\n<li><strong>Minute Book</strong> - this is where the corporate records are kept. A copy of the share transfer agreement can be kept in the minute book of the corporation(s) that issued the shares transferred under the agreement</li>\n<li><strong>Subscription Agreement</strong> - an agreement for the purchase of shares between a person buying shares and the corporation issuing the shares.</li>\n</ul>","frontmatter":{"title":"Overview of Share Transfer Agreement","date":"March 30, 2017","description":"A Share Transfer Agreement is an agreement that transfers shares from the vendor, to a purchaser corporation in exchange for shares in the purchaser corporation.","author":{"id":"rajah@cobaltcounsel.com","first":"Rajah","last":"Lehal","bio":"Rajah Lehal is Founder and CEO of Clausehound.com.  Rajah is a legal technologist and technology lawyer who is, together with the Clausehound team, capturing and sharing lawyer expertise, building deal negotiation libraries, teaching negotiation in classrooms, and automating negotiation with software.","image":{"childImageSharp":{"fluid":{"base64":"data:image/jpeg;base64,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","aspectRatio":1,"src":"/static/d7bbad08c257f3987a4a5710553e9e17/bdd4d/Rajah.jpg","srcSet":"/static/d7bbad08c257f3987a4a5710553e9e17/2b9ee/Rajah.jpg 80w,\n/static/d7bbad08c257f3987a4a5710553e9e17/e5d64/Rajah.jpg 160w,\n/static/d7bbad08c257f3987a4a5710553e9e17/bdd4d/Rajah.jpg 320w,\n/static/d7bbad08c257f3987a4a5710553e9e17/6e63d/Rajah.jpg 400w","sizes":"(max-width: 320px) 100vw, 320px"}}}},"tags":["Rajah","Contract Overviews"]}}},"pageContext":{"slug":"/overview-of-share-transfer-agreement/","previous":{"fields":{"slug":"/meet-the-startup-of-the-week-north-in-focus-with-co-founder-gabrielle-foss-and-mental-health-program-coordinator-patrick-hickey/"},"frontmatter":{"title":"Meet Propel Entrepreneurship's Startup of the week - North In Focus","tags":["margaret","Announcements"],"author":{"id":"margaret@clausehound.com","first":"Margaret","last":"Rimek"}}},"next":{"fields":{"slug":"/overview-of-terms-of-use/"},"frontmatter":{"title":"Overview of Terms of Use","tags":["Terms of Use","Rajah","Contract Overviews"],"author":{"id":"rajah@cobaltcounsel.com","first":"Rajah","last":"Lehal"}}}}}}