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Offer to Purchase Shares - Short Form


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Introduction
Description
Use
Table of Contents

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Introduction

When a business becomes a company/corporation, or a private legal person as defined in the Civil Code of Quebec, the transfer of the business can be achieved either by the sale of its business (see series Y02 of the Business Precedents) or by the sale of at least a majority of the issued and outstanding voting shares of the latter to a new buyer.

A transfer of business by way of a sale of shares can be launched in various ways. Some sales begin with a simple letter of intent (see document Y04.200 of the Business Precedents) summarizing the broad outlines of the operation followed by a sale of shares agreement (see document Y04.500 or Y04.550 of the Business Precedents) containing all the terms of the sale. Others are initiated by submitting a very detailed offer to purchase followed by a closing certificate (see document Y04.600 of the Business Precedents) and the execution of ancillary documents required to complete the contractual framework of said transaction.

This document establishes, in a less detailed manner than document Y04.275 of the Business Precedents (Offer to purchase shares stock – long form), all the financial, legal and commercial component which are normally found in an offer to purchase shares.

Description

The Offer to Purchase Shares is the legal instrument by which a person, known as the "OFFEROR", offers to another person, called the "OFFEREE", to acquire part or all of the shares it holds in a corporation / company, in compliance with the price and the manner specified in the offer.

Use

This document is an alternative to the letter of intent to purchase shares (see document Y04.200 of the Business Precedents), in the sale/purchase of share documentary process, whose primary function is to further the transaction without definitively binding the parties.

We recommend the use of this document as part of a proposed purchase, when the offeror wishes the offeree to immediately accept the legal framework of the entire sale to come, so as to avoid that the transaction be aborted in the event that a disagreement occurs on any of the unspecified terms, as can happen when the process is launched by a simple letter of intent.

In the event of a minimized documentary process, this offer may be followed by a Closing Certificate (see document Y04.600 of the Business Precedents), rather than a sale of shares agreement similar to what appears in the documents Y04.500 or Y04.550 of the Business Precedents.

Because the following document contains a short version of an Offer to Purchase Shares rather than a detailed version (see document Y04.275 of the Business Precedents) it is better suited to transactions with lower economic issues or scenarios of sale between shareholders having a detailed understanding of the activities of the business. It can also be used in a progressive documentation of the transaction in order not to intimidate the vendor at the beginning of the transaction, by using, in the offer, an omnibus provision as a bridge between the Offer to Purchase Shares (short form) and a Share Purchase Agreement (long form) (see document Y04.550 of the Business Precedents).

Table of Contents

0.00 INTERPRETATION
0.01 Definitions
0.01.01 Breach
0.01.02 Closing Date
0.01.03 Confidential Information
0.01.04 Control
0.01.05 Corporation
0.01.06 Effective Date
0.01.07 Encumber or Encumbrance
0.01.08 Equipment
0.01.09 Force Majeure
0.01.10 Loss
0.01.11 Offer
0.01.12 Shares
0.02 Entire Agreement
0.03 Applicable Law
0.04 Non-Compliance
0.04.01 Severability
0.04.02 Substitute Provision
0.05 Miscellaneous
0.05.01 Cumulative Rights
0.05.02 No Waiver
0.05.03 Time and Days
a) Time of the Essence
b) Computation of Time
c) Delays
0.05.04 Approval
1.00 PURPOSE
1.01 Offer to Purchase
1.02 Conditions Precedent
1.03 Election by OFFEROR
2.00 CONSIDERATION
2.01 Price
2.02 Adjustments
2.02.01 Operating Income
2.02.02 Shareholders’ Equity
3.00 TERMS OF PAYMENT
3.01 Deposit
3.01.01 Escrow
3.01.02 Instructions
3.01.03 Return
3.02 Initial Instalment
3.03 Balance of Price
3.03.01 Monthly Instalments
a) Total Amount
b) Payment Schedule
c) Interest
3.04 Prepayment
3.05 Promissory Note
3.05.01 Remittance
3.05.02 Scope
3.06 Claims by a Third Party
3.07 Loss of Term
4.00 SECURITY
4.01 In Favour of OFFEROR
4.02 In Favour of BENEFICIARY
4.02.01 Liability
4.02.02 Pledge of Personal Property
4.02.03 Shares Placed in Escrow
4.02.04 Other Rights
5.00 MUTUAL REPRESENTATIONS AND WARRANTIES
5.01 Status and Authority
5.02 Disclosure
6.00 REPRESENTATIONS AND WARRANTIES OF OFFEROR
6.01 Nominee
6.02 Financing
7.00 REPRESENTATIONS AND WARRANTIES OF BENEFICIARY
7.01 Person
7.01.01 Insolvency
7.01.02 Conduct
7.02 Shares
7.02.01 Ownership
7.02.02 Encumbrances
7.02.03 Issue and Transfer
7.02.04 Assignability
7.02.05 Dividend
7.02.06 Dilution
7.03 Corporation
7.03.01 Authorized and Issued Capital
7.03.02 Books and Records
7.04 Shareholders
7.05 Human Resources
7.05.01 Labour Standards
7.05.02 Occupational Health and Safety
7.05.03 Pay Equity
7.05.04 Key Persons
7.06 Corporate Finance
7.06.01 Leasing Agreements
7.06.02 Adverse Event
7.06.03 No Conflict or Breach
7.07 Financial Matters
7.07.01 Financial Statements
7.07.02 Guarantees and Security
7.07.03 Advances
7.07.04 Release
7.08 Tax Matters
7.08.01 Income Tax
7.08.02 Filing
7.08.03 Deductions and Remittance
7.09 Occupancy Rights
7.09.01 Real Property
7.09.02 Leases
7.10 Permits and Licenses
7.10.01 Situation
7.11 Environmental Matters
7.11.01 Environmental Laws
7.11.02 Hazardous Materials
7.11.03 Compliance
7.12 Intellectual Property
7.12.01 Entitlement
7.12.02 Claims
7.12.03 Transaction
7.12.04 Copyright
7.13 Customer Credit
7.13.01 Accounts Receivable
7.14 Insurance
7.14.01 Coverage
7.14.02 Good Standing
7.14.03 Claims
7.15 Legal Proceedings
8.00 MUTUAL DUTIES AND OBLIGATIONS
8.01 Representations and Warranties
8.02 Confidential Information
8.02.01 Undertaking
8.02.02 Duration of Undertaking
8.02.03 Transaction not Concluded
a) Request for Return
b) Destruction
8.02.04 Penalty
8.03 Indemnification
8.03.01 Threshold
8.03.02 Scope
8.03.03 Procedure
8.04 Disclosure of Existence of Offer
8.04.01 Undertaking
8.04.02 Public Announcement
8.04.03 Exception
9.00 DUTIES AND OBLIGATIONS OF OFFEROR
9.01 Continuous Disclosure
9.02 Closing Date
9.03 Release and Discharge
9.03.01 Deadline
9.03.02 Indemnification
9.04 Financial Statements
10.00 DUTIES AND OBLIGATIONS OF BENEFICIARY
10.01 Prior to Closing Date
10.01.01 Access to Documents
10.01.02 Breach of Representations and Warranties
a) Annulment
b) Return of Deposit
10.01.03 Encumbrances
10.01.04 Conduct of Business
10.02 After Closing Date
10.03 Transition Period
10.03.01 Continuous Disclosure
10.03.02 Support
10.04 Non-Competition
10.05 Non-Solicitation
10.05.01 Personnel
10.05.02 Clients
10.06 Release
11.00 SPECIAL PROVISIONS
11.01 Assignment
11.01.01 Prohibition
11.01.02 Effect of Breach
11.02 Force Majeure
11.02.01 Limitation of Liability
11.02.02 Duty
11.02.03 Rights of Other PARTY
11.03 Further Assurances
11.04 Closing Session
11.04.01 Place
11.04.02 Time Limit to Accept
11.05 Taking of Inventory
12.00 GENERAL PROVISIONS
12.01 Notice
12.02 Dispute Resolution
12.02.01 Good Faith Negotiations
a) Written Notice
b) Meeting
12.02.02 Mediation
a) Process
a) Mediator
b) Settlement
c) Legal Proceedings [OR Arbitration]
12.02.03 Arbitration
12.03 Election
12.04 Amendment
12.05 No Waiver of Rights
12.06 Electronic Transmission
13.00 REVOKING ACCEPTANCE OF OFFER
14.00 EFFECTIVE DATE
15.00 DURATION
15.01 Expiry Date
15.02 Survival
16.00 SCOPE



SCHEDULE 7.07.01 – FINANCIAL STATEMENTS
SCHEDULE 10.04 – PRODUCTS AND SERVICES
SCHEDULE 10.05.02 – CLIENTS






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