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What preliminary agreements are commonly drafted?
Execution of non-disclosure and confidentiality agreements is highly recommended, especially with regard to the manner in which personal data and sensitive information are to be disclosed within the due diligence process. These may be preceded by signing term sheets or memoranda of understanding.
What documents are required?
The principal documentation will depend on the proposed acquisition structure and agreed payment mechanism; a share purchase agreement, shareholders’ agreement and escrow agreement are usually considered as the main transaction documents.
Which side normally prepares the first drafts?
The buyer typically prepares the first drafts of the transaction documents, taking into account the conclusions contained in the due diligence reports. However, in some cases the vendor may provide drafts of the transaction documents for review during the due diligence process, indicating which clauses of the transaction documents are negotiable or non-negotiable.
What are the substantive clauses that comprise an acquisition agreement?
Substantive clauses cover topics including:
- an exact description of the subject of the acquisition;
- the consideration (payment mechanism/post-closing purchase price adjustments);
- conditions for closing;
- the closing mechanism;
- covenants pending closing;
- representations and warranties of the parties;
- governing law; and
- dispute resolution.
What provisions are made for deal protection?
Termination/break fees can be negotiated and included as a form of deal protection.
What documents are normally executed at signing and closing?
The main acquisition agreement (typically the share purchase agreement) is executed at signing, while the remaining transaction documents usually represent schedules thereto and are executed before or on closing. Depending on the target and transaction structure, the closing mechanics involve execution of title transfer documents and delivery of proof of payment.
Are there formalities for the execution of documents by foreign companies?
No specific requirements apply.
Are digital signatures binding and enforceable?
Digital signatures are binding and enforceable insofar as they comply with the Digital Document and Digital Signature Act, which provides special rules for making, proving and transmitting the digital volition.
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