Stock Exchange Agreements effectuate contractual arrangements between two parties who have agreed on the exchange of each company’s stock. This exchange is generally part of either a merger or sale of one of the companies.

A typical Stock Exchange Agreement will outline that, subject to the terms and conditions of this Agreement, Company A agrees to transfer an aggregate of 100 Class A common shares of the Company, which represent 100% of the issued and outstanding shares of Company A’s common stock, to the Purchaser, and the Purchaser agrees to issue to Seller an aggregate of 100,000 newly issued, restricted shares of Purchaser’s common stock, representing approximately 51% of the outstanding shares of common stock of Purchaser. At the completion of the exchange, the Company will be a wholly owned subsidiary of Purchaser.

Once these agreements are executed, ownership of the company is transferred to the purchaser.

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A Stock Exchange Agreement is a written contract, signed and executed by representatives of two or more companies, whereby the participants in the agreement agree to exchange stock, usually as a precursor to the signing of a merger or acquisition agreement by and between the parties. When one person or entity owns more than 50% of a company’s outstanding stock, that person or entity is said to be the “controlling shareholder” of the company. Typically, stock exchange agreements will involve more than 50% of one of the companies’ outstanding stock, so that the other party becomes a controlling shareholder. Also known as “share exchange agreements”, these contracts are common in the world of corporate law and finance and are generally governed by the laws of Delaware or state where the two corporations maintain their headquarters or principal place of business.

RealDealDocs.com is a division of Practice Technologies, Inc. the creators of SmartRules.com.
SmartRules provides step by step guides to local rules and civil procedure for state courts & federal courts throughout the country.

Popularity: 6% [?]