Share Purchase Agreement

Even though the terms "share" and "stock" are often used interchangeably, there are significant differences. The stock represents the ownership of a corporation as a whole. You can own stocks in multiple companies. As to how much stock, that depends on the number of shares owned. If a company has an outstanding float of 1 million shares and you own 10 shares, for example, you would own 1/100,000th of the company.

A Share Repurchase Agreement is used when a corporation wants to buy back shares. It requires a specific contract that aims to protect both the corporation and its shareholders.
Corporations may buy back shares if the directors think that the market is undervaluing the shares and thus, it's an opportunity to repurchase the shares and the demand is likely to push the price of the shares up, which benefits all other shareholders.

A stock certificate documents the ownership rights in a number of shares. All corporations use some form of stock certificates as formal documentation. Such a certificate would at least contain the details of the corporation and the shareholder.

It is a rule stating that a shareholder who is selling shares must first offer them to the other shareholders of the same company. As such, the right of first refusal is a way to protect the corporation from potentially undesirable new shareholders.

One advantage of the Share Purchase Agreement is that there are no liabilities. Once the purchase is complete, the previous shareholder is no longer responsible if the company goes into debt. As you know, corporations are legal structures separate from shareholders and directors. In contrast, one disadvantage is that there is always a risk. Share ownership is often riskier than owning other assets. This is where the warranties of the purchase could become essential.