Specific Performance Of Share Purchase Agreement

Swiss Post has examined how to remedy the „specific performance“ with regard to share purchase and equity agreements. As a rule, recourse is granted in the first cases, while in both cases damages are awarded. The most common method of obtaining protection against the transfer of the shares in question to a third party is to register in the share register by registering such a prohibition. Therefore, a third party considering the purchase of the shares will be aware of the restriction. Where a third party nevertheless acquires the shares, the majority of existing doctrine and case law supports the view that the sellers and buyers acted in bad faith and in violation of the explicit and made public rights of the beneficiary. In such cases, the contract may be terminated. With regard to the shares of a private company, some performance may be ordered, since, as in this case, these shares may not be readily available on the market and valuation may be difficult. Contracts for the sale of listed shares are also candidates for a specific performance, in circumstances such as those of the present case, in which the seller is subject to an injunction preventing him from selling the shares, where the buyer has scrupulously followed his right to certain services from the outset and where the applicant has concluded additional contracts for the resale of part of the shares. The uniqueness of the property that is the subject of the contract is a non-determining factor in deciding the adequacy of the specific service. The underlying principle is that, if the property is unique, it should be delivered because the damages would not have placed the party in the position in which it would have bent without the infringement.

However, these unfair restrictions, from the shareholder`s point of view, are justified because they were received by the shareholder when he deliberately accepted such restrictions within the ESA. Therefore, companies can only impose the restrictions agreed by the shareholder and mentioned in the ESA. Restrictions should therefore not be seen as a brake on the company`s growth. The courts have ruled at several times that the discretionary decision to refuse the transfer of shares should not be hijacked by the company. In the case of UBS, the complainant securities dealer wanted to purchase the shares of the private company that then ran the Montreal Stock Exchange held by the defendant, a letterbox company that had no assets other than the shares held in New York. The applicant claimed that it had concluded with the defendant a binding oral sales contract concluded between one of the applicant`s securities dealers and a director, senior managers and limited partners of the defendant. Relying on that agreement, the applicant agreed to sell part of the shares acquired to a third party. Prior to the date of conclusion of the agreement, the private company announced that it would contribute its shares and the defendant then asserted that no binding agreement had been reached and that the defendant refused to provide the shares. LIMITATION OF FREEDOM OF SALE / ASSIGNMENT – When a shareholder circumvents his obligation and, consequently, reduces / removes the right of pre-emption or any other right of the company`s shareholders` agreement, the principles of contractual interpretation apply and the contract between the shareholder and the company is interpreted objectively. The freedom of negotiation provided for in S.27 of the Indian Contract Act does not apply in cases where the courts have interpreted these restrictions as appropriate. The applicant sought a declaration that the defendant had accepted the sale of the shares and the actual performance of the contract. .

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