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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 Share Purchase 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 Activities
0.01.02 Articles
0.01.03 Best Effort
0.01.04 Breach
0.01.05 Change in Control
0.01.06 Closing Date
0.01.07 Confidential Information
0.01.08 Corporation
0.01.09 Effective Date
0.01.10 Encumber or Encumbrance
0.01.11 Equipment
0.01.12 Escrow Agreement
0.01.13 Event of Default
0.01.14 Financial Statements
0.01.15 Force Majeure
0.01.16 GAAP
0.01.17 Governing Statute
0.01.18 ICT Assets
0.01.19 Intellectual Property
0.01.20 Law
0.01.21 Legal Representatives
0.01.22 Offer
0.01.23 Ordinary Course of Business
0.01.24 PARTY
0.01.25 Person
0.01.26 Prime Rate
0.01.27 Property
0.01.28 Shares
0.01.29 Subsidiary
0.02 Precedence
0.03 Jurisdiction
0.03.01 Governing Law
0.03.02 Non-compliance
a) Severability
b) Substitute Provision
0.04 Miscellaneous
0.04.01 Cumulative Rights
0.04.02 Time and Dates
a) Time of the Essence
b) Computation of Time
c) Delays
0.04.03 Financial References
0.04.04 Gender and Number
0.04.05 Headings
0.04.06 Presumptions
1.00 PROPOSAL
1.01 Offer to Purchase
1.02 Conditions Precedent
2.00 OFFERING PRICE
2.01 Price
2.02 Adjustment
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
3.04 Interest Rate
3.05 Promissory Note
3.06 Expiry of the Term
3.07 Advance Payment
3.08 Acceleration of Payment
4.00 SECURITY
4.01 In Favour of Vendor
4.01.01 Transfer of Title
4.01.02 Escrow
4.02 In Favour of the Purchaser
5.00 MUTUAL REPRESENTATIONS AND WARRANTIES
5.01 Status
5.02 Authority
5.03 Binding Agreement
6.00 REPRESENTATIONS AND WARRANTIES OF OFFEROR
6.01 Canadian Resident
6.02 Canadian Status
6.03 Exempt Investor
7.00 REPRESENTATIONS AND WARRANTIES OF THE OFFEREE
7.01 Person
7.01.01 Status
7.01.02 Authority
7.01.03 Exempt Investor
7.02 Shares
7.02.01 Ownership
7.02.02 Issue and Transfer
7.02.03 Encumbrances
7.02.04 Assignability
7.02.05 Dividend
7.02.06 Dilution
7.03 Corporation
7.03.01 Status
7.03.02 Share Capital
7.03.03 Books and Records
7.04 Shareholder Agreement
7.05 General Compliance
7.05.01 Applicable Laws
7.05.02 Knowledge
7.06 Subsidiaries and Affiliates
7.07 Human Resources
7.07.01 Employment Standards
7.07.02 Employment Laws
7.07.03 Collective Bargaining Agreement
7.07.04 Employee Benefit Plan
7.07.05 Resignation
7.08 Coporate Finance
7.09 Financial Matters
7.09.01 Financial Statements
7.09.02 Financial Position
7.09.03 Guarantee and Security
7.10 Tax Matters
7.11 Ocsupancy Rights
7.11.01 Property
7.11.02 Leased Premises
7.12 Real Estate Transactions
7.13 Procurement
7.13.01 Agreement
7.13.02 Equipment
7.13.03 Leased Equipment
7.13.04 Third Party Goods
7.13.05 State of Equipment
7.13.06 Raw Materials
7.14 Operations
7.14.01 Business Relations
7.14.02 Business Opportunities
7.14.03 Behaviour in the Performance of Duties
7.15 Permits and Licenses
7.16 Environmental Matters
7.17 Intellectual Property
7.18 ICT Assets
7.19 Advertising and Promotions
7.20 Marketing
7.21 Customer Credit
7.21.01 Accounts Receivable
7.21.02 Consignment
7.22 Insurance
7.23 Legal Proceedings
7.24 Limitation Periods
7.24.01 Tax Matters
7.24.02 Other Matters
7.24.03 Fraud
7.24.04 Undertaking
8.00 MUTUAL DUTIES AND OBLIGATIONS
8.01 Confidential Information
8.01.01 Undertaking
8.01.02 End of Agreement
8.02 Indemnification
8.02.01 “Loss”
8.02.02 Scope
8.02.03 Procedure
8.02.04 OFFEREE’s Deductible
8.03 Disclosure of OFFER
9.00 DUTIES AND OBLIGATIONS OF THE OFFEROR
9.01 Conditions
9.02 Indemnification
9.03 Financial Statements
10.00 DUTIES AND OBLIGATIONS OF THE OFFEREE
10.01 Prior to the Closing Date
10.01.01 Access to Documents
a) Due Diligence
b) Non Compliance
10.01.02 Default
a) Annulment of Offer
b) Return of Deposit
10.01.03 Taking of Inventory
10.01.04 Conduct of Business
10.02 After the Closing Date
10.02.01 Transition
10.02.02 Non-competition
a) Scope
b) Remedy
c) Reasonableness
10.02.03 Non-solicitation
11.00 SPECIAL PROVISIONS
11.01 Assignment
11.01.01 Prohibition
11.01.02 Effect of Breach
11.01.03 Exception
11.02 Force Majeure
11.02.01 No Default
11.02.02 Duty
11.02.03 Right to Mitigate
11.03 Closing
11.04 Miscellaneous
11.04.01 Waiver
11.04.02 Release and Discharge
12.00 GENERAL PROVISIONS
12.01 Notices
12.02 Dispute Resolution
12.02.01 Good Faith Negotiations
12.02.02 Mediation
12.02.03 Arbitration
a) Jurisdiction
b) Ruling
c) Costs
12.03 Choice of Venue
12.04 Counterparts
12.05 Amendment
12.06 Waiver of Rights
12.07 Electronic Transmission
13.00 EXPIRY
14.00 SCOPE


SCHEDULE 0.01.02 - ARTICLES
SCHEDULE 0.01.11 – EQUIPMENT
SCHEDULE 0.01.12 – ESCROW AGREEMENT
SCHEDULE 0.01.14 - FINANCIAL STATEMENTS OF THE CORPORATION
SCHEDULE 0.01.26 – PROPERTY
SCHEDULE 7.02.04 - RESOLUTION AUTHORIZING THE TRANSFER
SCHEDULE 7.03.01 – CERTIFICATE OF COMPLIANCE/GOOD STANDING OF CORPORATION
SCHEDULE 7.13.03 – LEASED EQUIPMENT




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