Representations And Warranties Share Purchase Agreement

Since the legislation does not provide for differentiation based on the issuance of quotas constituting sales shares, this would not affect valuations in this regard.8 According to Article 219 TCO, “the seller is liable for the absence of the qualifications communicated for purchase and is also responsible for material, legal or economic defects incompatible with qualifications or the quantity of qualifications and the reduction or transfer of the benefit that the buyer expected to obtain for his use.” The final scope depends on the size and nature of the transaction. The lens and the seller will usually make the following insurances and guarantees. Reps and warranties refer to factual allegations made by a seller in the course of an attempt to induce a buyer to buy his business. Each of the parties involved in the transaction relies on the other to provide real information about the transaction. The seller assures that the business is worth the investment that the buyer plans to make. The case is a useful reminder that if the buyer and seller are to include insurance in a contract, there must be a clear wording to that effect. While it is unlikely to ever be accepted by a prudent seller, if this is indeed the case, the buyer should try to include a provision where the seller acknowledges that he has given assurances that prompted the recipient to enter into the agreement. In the event that the insurance and guarantees provided in the agreement relate to the qualifications of the companies concerned, not to the shares (due to the fact that shares are the main theme of share purchase contracts), the question of whether these can be considered as specific qualifications (“representations and guarantees”) under Article 219/1 tCO is controversial4. Shares are the fundamental theme of share purchase contracts. Therefore, the seller`s primary obligation is essentially a result of defects with respect to the shares.

In the absence of specific provisions regarding the representations and guarantees of share purchase contracts, this obligation is subject to general provisions. Accordingly, the seller first considers that the shares are properly issued by the target company, that, if necessary, the shares are properly issued and that similar issues directly concern the shares. In the view of both parties, full disclosure is essential. This is due to the fact that the buyer depends on the assets or shares acquired from all issues and issues disclosed. For the buyer, full disclosure means that there will be no surprises after closing. Representatives and guarantees include a compensation clause that reduces the risk of financial losses if one of the parties does not make a significant presentation that could result in financial loss after the transaction. The OSG contained relatively uniform safeguards that indicated that the accounts “showed a true and fair view of the state of the situation… and the benefits…

as when they were prepared…¬†and were established in accordance with generally accepted accounting practices (GAAP). Depending on the type of activity of the target, there may be many other representations and guarantees. For example, the seller prepares disclosure plans. It contains various facts, exceptions or clarifications on representations and guarantees. The case concerned the acquisition of all the share capital of Gissings Group Limited (“GGL”) by Sycamore Bidco Limited (“Sycamore”), an ad hoc vehicle specifically created for the acquisition, whose majority shareholder was a private equity firm. Due to the inadequacy of TCO`s provisions regarding sales contracts relating to share sale contracts, the parties generally attempt to detail potential issues10. Accordingly, the insurance and guarantees concerning the target company, the extent of the seller`s liability for the target company and their results must be formulated in detail, in accordance with the will of the parties in the share purchase agreements.

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