Sale of Business vs Sale of Shares

sale agreements : sale of shares vs sale of business  

sale of shares
sale of business
Sale by a Shareholder/s of the CompanySale 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 ShareholderThe Seller is therefore the Company
The Shareholder receives the purchase price for the sharesThe 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 applyS197 of the Labour Relations Act, governs the transfer of the

employees to the purchaser

Section 11 of the VAT Act does not applyS11 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 applyS34 of the Insolvency Act applies – parties are required to advertise the

sale in the local newspaper

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