17. Dezember 2020
Share Purchase Agreement Guarantee
Sellers are warned against the latter during the sale transaction and the buyers have assured that they have the protection of the guarantees and compensations contained in the contract to purchase assets or shares. According to Italian law, a Caparra Confirmatoria is a sum of money given by one of the contracting parties to the other party with the effect that if the contract is executed correctly, the Caparra will be returned or subject to payment, while if the contract is not executed (i) if the non-exporting party is the party that gave the Caparra. the other party may terminate the contract and retain the Caparra, and (ii) if the underperforming party is the party that received the Caparra, the other party may terminate the contract and demand double the amount of the Caparra. In principle, Caparra`s confirmands may also consist of fungible goods rather than money, whereas this would be rather unusual for stock purchases. Therefore, a confirmation from Caparra results in each party being entitled to collect a net amount equal to the amount of caparra corresponding to Caparra`s amount if the other party violates the contract. In any event, the party exercises the opportunity to claim damages from the party that is not in good standing, by renouncing Caparra`s right of confirmation and by pursuing its right according to the usual rules. 5. The seller is the sole owner and registered holder of the shares In order for a share purchase to be completed, the target company must be properly and in good condition. This means that the company must be officially recognized by Companies House.
Being „in good reputation“ means that the company has continued to exist since its inception. The share capital allocated, i.e. new shares issued to existing shareholders or third parties. From the buyer`s point of view, the purpose of both documents is to predict the situation of the purchase of the business and, subsequently, it appears that his tax treatment prior to the transactions was wrong. In this case, the company may be held responsible for underpaid taxes, interest (which can be high, especially when a tax audit reveals tax errors made a few years earlier), or even additional penalties.