sale agreements : sale of shares vs sale of business Â
sale of shares | sale of business |
---|---|
Sale by a Shareholder/s of the Company | Sale by the Company |
in respect of the Shareholder’s shares (units in the company) | Of the Company’s Business as a going concern |
The Shares can be sold in whole or only a portion and can be sold to the other shareholders or a 3rd party | The Business may comprise of inter alia: fixed assets, stock in trade, goodwill, the name of the company |
The Seller is therefore the Shareholder | The Seller is therefore the Company |
The Shareholder receives the purchase price for the shares | The Company receives the purchase price for the business |
If only 1 shareholder remains, the shareholders agreement terminates. The MOI continues to exist but will require amendments | The shareholders of the Seller will remain the same – it is the business being sold, not the shares |
Section 197 of the Labour Relations Act does not apply | S197 of the Labour Relations Act, governs the transfer of the employees to the purchaser |
Section 11 of the VAT Act does not apply | S11 of the VAT Act may apply – SARS charges VAT at 0% if the parties are both VAT Vendors & the Business is being sold as a “going concern” |
S34 of the Insolvency Act does not apply | S34 of the Insolvency Act applies – parties are required to advertise the sale in the local newspaper |
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