The Member Interest Purchase Agreement is a crucial document used in South African business transactions when transferring ownership interests in close corporations. It serves as the primary agreement documenting the sale and purchase of member interests, establishing the rights and obligations of both seller and purchaser. The agreement must comply with South African legislation, including the Close Corporations Act 69 of 1984 and related regulations. This document is essential for transactions involving close corporations, which remain a popular business structure in South Africa despite the introduction of the new Companies Act. The agreement typically includes detailed provisions on purchase price, payment mechanisms, warranties, representations, conditions precedent, and completion requirements. It also addresses tax implications, regulatory compliance, and other jurisdiction-specific considerations relevant to South African business transfers.
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1. Parties: Identification of the seller(s) and purchaser(s) of the member interest
2. Background: Context of the transaction, description of the close corporation, and current ownership structure
3. Definitions and Interpretation: Definitions of key terms and interpretation rules for the agreement
4. Sale and Purchase: Core transaction terms including the specific member interest being sold
5. Purchase Price: Amount, payment terms, and mechanisms for price adjustments if applicable
6. Conditions Precedent: Conditions that must be met before the agreement becomes effective
7. Completion: Details of closing process, timing, and deliverables
8. Seller Warranties: Warranties regarding ownership, authority, and status of the close corporation
9. Purchaser Warranties: Warranties regarding capacity to purchase and compliance with laws
10. Pre-completion Obligations: Obligations of parties between signing and closing
11. Tax Matters: Allocation of tax liabilities and responsibilities
12. Confidentiality: Obligations regarding confidential information
13. Notices: Process and requirements for formal communications between parties
14. General Provisions: Standard legal provisions including governing law, jurisdiction, and entire agreement
1. Seller Financing: Include when part of purchase price is paid through installments or vendor financing
2. Security Arrangements: Include when there are security provisions for deferred payments
3. Regulatory Approvals: Include when transaction requires competition authority or other regulatory approvals
4. Employee Matters: Include when there are specific agreements regarding employees
5. Restraint of Trade: Include when seller agrees to non-compete provisions
6. Earn-out Provisions: Include when purchase price includes performance-based components
7. Third Party Consents: Include when transaction requires specific third party approvals
1. Member Interest Details: Detailed description of the member interest being transferred
2. Close Corporation Information: Key information about the close corporation including financial statements
3. Warranties: Detailed warranties and representations by the seller
4. Purchase Price Calculation: Detailed calculation methodology for purchase price including adjustments
5. Required Consents: List of required third party and regulatory consents
6. Encumbrances: List of any existing encumbrances on the member interest
7. Material Contracts: List and copies of material contracts of the close corporation
8. Completion Deliverables: Detailed list of documents and items to be delivered at completion
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