Buying Shares in a Company?
October-November 2000
Vendors of a business that began from scratch in a company can sometimes attract bigger capital gains tax concessions by selling their shares compared with a sale of the business by the company.
However, any purchaser of private company shares needs to be protected from "skeletons in the closet" because company liabilities (even contingent liabilities) usually remain with the company- irrespective of any ownership change. e.g. an amended tax assessment covering a financial period prior to the purchase.
Unwanted exposures can be reduced through:
- Due diligence investigations;
- Warranties;
- Indemnities;
- Security for performance;
- Insurances against various risks;
- Obtaining covenants from individuals and others.
For further information, contact Joe Lederman at BALDWINS, Australian Lawyers & Consultants.
Return to the Corporations Law Archive or Australian Tax Law Archive.
