This document is a condition that can be inserted into a business sale agreement.
In most company constitutions, there is a provision that shareholders need to ratify, by way of resolution at a general meeting, the disposal of shares or assets in a business. This provision applies particularly where the disposal would have the effect of selling the business to another party.
Therefore, no sale of business agreement would be valid without the ratification of the agreement by shareholders.
Using this precedent
This precedent clause is a condition precedent which can be used in a business sale agreement. It can also be inserted into the “conditions precedent” schedule of the separate precedents “Business sale agreement – sale of assets (short form)” and “Business sale agreement – sale of shares (short form)”.
When inserting this optional clause into an agreement, care must be taken to ensure that the agreement remains consistent. Cross-references, definitions and schedules should all be checked.
This document has been authored for Lexis Nexis by Jeremy Kriewaldt, Partner, Atanaskovic Hartnell and Elise Margow, Principal, Legally Speaking.
This document is prepared with the assistance of Specialist Editor Murray Landis, Partner, K&L Gates.