Warranties In Share Purchase Agreements

The total share capital issued, i.e. the face value (at face value) of the shares subject to the share, and where the assurances and guarantees in the agreement relate to the qualifications of the target companies, not the shares (since shares are the main theme of share purchase contracts), is controversial as to whether these can be considered specific qualifications (“insurance and guarantees”) under Article 219/1 of TCO 4. It is not difficult to find a general set of guarantees for a sales contract. In fact, it`s usually easier to use a set of warranties than to develop something specific for your transaction. However, in practice, such a right is possible if the buyer obtains as precise guarantees as possible, as well as the nature of the activities of the acquired business and the information obtained by the buyer during the transaction process, including during the interview with the seller and due diligence (if carried out). Therefore, these guarantees should apply, depending on the situation of general affairs (for example. B correct accounting, compliance with tax payment deadlines and tax evasion of tax returns), but also more specific questions regarding the correct tax treatment of sensitive transactions (for example. B correct application of reduced VAT rates, withholding tax), the establishment of complete clearing documents or the retention of all the documents necessary to require the 0% rate for export transactions or intra-EU deliveries. Since the legislation does not provide for differentiation based on the issuance of quotas constituting sales shares, this would not affect valuations in this regard.8 While warranties offer some protection in a share purchase agreement, these safeguards may be limited and may not necessarily be the best way to reduce the specific risks that apply to your transaction. The most important thing is to be informed. Take the time to consider the full range of risks based on both the information you have been provided and your own requests.