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Buying Shares

When buying share, you are either buying a share of future profit of the Company (dividends) or wishing to control or own the Company and its businesses.

Just like Business Acquisitions, the Vendor is not obliged to disclose and can withhold critical information from you regarding the Company. The principle of caveat emptor (let the buyer beware) applies.

Besides going through the Share Sale Agreement with you, we would recommend you to undertake investigation on the Company especially if you are going to manage/run the Company in the future. You should consider the following issues before committing yourself to the purchase:

1. The financial position of the company. You should go through the company’s financial reports with your accountant or business advisor. In some cases, you may need an indemnity from the vendor.
2. You should consider the Company’s Constitution, especially those provisions dealing with dividend payout if you are an investor.
3. If you are buying shares with the intention of running the Company’s Business yourself, all the matters discussed under the Business Acquisition section are just as relevant.
4. If you are buying less than 50% shares of the Company, you may consider the need of entering into shareholder agreement with the other shareholders.
5. Stamp duty and tax issues.