Share Purchase Agreement Warranties

An exemption is intended to place the risk of liability incurred in full with the seller. Unlike warranties, the buyer is not required to demonstrate that the value of the business has decreased due to the liability incurred. Given the pace of changes introduced in both Polish and international law, changing court decisions and inconsistencies in the decisions of the tax authorities, appropriate guarantees and indemnification clauses covering the company`s tax comparisons should be among the buyer`s priorities in negotiating the terms of the BSMS. Tax underpayments are real money and can seriously affect the profitability of the buyer`s investment. It is therefore desirable to include appropriate safeguards in share purchase agreements. Below we look at the general warranties and what they mean for a buyer under a share sale agreement. At the time of the share purchase agreement, the target company must have filed all tax returns and provided all necessary information regarding those returns. The buyer therefore brought a claim for breach of the warranty (a claim worth approximately £6 million), but also stated that the breach of the above-mentioned warranties was a misrepresentation that led it to conclude the acquisition (which could lead to a declaration of termination of the contract that could be worth the full consideration paid of £17 million). This guarantee confirms that the seller is the sole and true owner of the shares sold. Given the nature of the opt-out clause and the fact that the benefits for the indemnified party are considerable, the application of the clause is limited to the well-defined cases in the share purchase contract, i.e. their entry results from the events indicated and refers to the taxes indicated in the contract, the maximum liability of the buyer being strictly limited to a certain amount (if the parties have agreed on such an amount) in the event and/or all of the events cited is limited together. A guarantee is a contractual factual statement and is presented by the seller in a share purchase agreement in order to describe different characteristics of the transaction at the time of the conclusion of the purchase.

2. The seller shall have the power and power to take and fulfil his obligations under the share purchase agreement. The seller has the necessary power to conclude the share purchase agreement and to fulfil the obligations arising therefrom, i.e. the seller must be a shareholder of the offeree company and obtain powers over these shares through a valid shareholder agreement. 7. The shares consist of all the share capital issued and allocated to the target company The advertisements are traded in a separate disclosure letter from the main agreement. If the share purchase agreement contains an exemption clause, the occurrence of a particular event leading to the seller`s liability constitutes a sufficient basis for the buyer`s right. Such events may include, for example, the adoption of a decision on the fixed estimate of the amount of tax paid too little and the resulting obligation to pay the tax, without the buyer having to prove other circumstances of the event.

Negotiating guarantees and compensation is an important process and can be complicated. To the extent possible, the seller has provided relevant information in the disclosure letter. If a seller does not disclose a relevant warranty matter, it may be sued by the buyer for breach of warranty. Although shares are the fundamental subject of share purchase agreements1, the purpose of the purchaser through share purchase agreements is usually the acquisition of companies of the company to which the shares concerned belong. In this context, in addition to stock-related qualifications, qualifications, which would significantly influence the company`s activities, are essential for the buyer.. . . .

4 months ago