Stock Purchase Agreement

A Stock Purchase Agreement (SPA) is a legally binding document that outlines the terms and conditions under which shares of a startup are bought and sold. It serves as a blueprint for ownership transfer and ensures clarity between the buyer and seller.

Key Components of a Stock Purchase Agreement:

  1. Definition of Terms – Clearly defines terms like “Shares,” “Seller,” and “Buyer.”
  2. Sale and Purchase of Shares – Specifies the number of shares being sold, the price per share, and the total purchase price.
  3. Representations and Warranties – Both parties declare certain facts about the company and the shares, ensuring transparency.
  4. Covenants – Commitments for future actions, such as financial reporting or restrictions on selling shares.
  5. Conditions Precedent – Actions that must occur before the transaction is finalized.
  6. Vesting and Transfer Restrictions – Often included to regulate how shares can be sold or transferred over time, especially for founders and employees.

Why SPAs Matter for Startups:

  • Investor Protection – Ensures investors receive agreed-upon shares and rights.
  • Founder Equity Management – Helps founders structure ownership and avoid disputes.
  • Legal Compliance – Ensures transactions adhere to corporate laws and regulations.
  • Future Financing Implications – Can impact future funding rounds and investor negotiations.

Written by Swedish Ventures, Rolf Olsson. Remarks to this article could be sent to glossary@swedishventures.se

ASO: DD-01-04