sale agreements : sale of shares vs sale of business
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 |
See the Post on Linked on our Company Page at : CH Legal Consulting Linkedin
For other Articles see: Legal Updates