Drafting and negotiating ancillary documents in a share purchase transaction
Drafting and negotiating ancillary documents in a share purchase transaction

The following Corporate guidance note provides comprehensive and up to date legal information covering:

  • Drafting and negotiating ancillary documents in a share purchase transaction
  • Loan note instrument
  • Board minutes and members' resolutions
  • Guarantee
  • Retention deed
  • Deed of contribution

This Practice Note is part of the Share purchase transaction toolkit.

In order to effect all aspects of the transaction, each share purchase transaction will require that certain ancillary documents be prepared (some of which will require more negotiation than others). These ancillary documents will either be drafted by the corporate lawyer drafting the share purchase agreement (SPA), or by a more junior colleague. Some will be entered into upon exchange and some upon completion (depending on whether or not these occur simultaneously).

Ancillary documents include:

  1. loan note instrument (where part of the consideration is to be satisfied with the issue of loan notes by the buyer)

  2. board minutes (each of the buyer, seller and target company will need to hold board meetings to approve various matters at completion, with the buyer and seller also holding board meetings at exchange in order to approve entry into the SPA)

  3. resolution of the members of the buyer (where the buyer's articles require a members' resolution to approve the terms of the proposed transaction)

  4. guarantee (where the buyer requires a guarantor to guarantee the seller's obligations under the SPA and it is agreed that this guarantee will be provided in a separate agreement, rather than being built into the SPA whereby the guarantor is added as a party

  5. retention deed (where an escrow or retention arrangement