How does a share purchase agreement work when buying a business in British Columbia?

This page covers British Columbia only, and a company governed by the province’s Business Corporations Act. For what the agreement is, see what a share purchase agreement is. The British Columbia details to check are the central securities register, the statement on the share certificate and the transparency register. For the asset side of a sale, see the British Columbia implied-terms page.

The Act that governs a transfer

Section 106.1(1) of the Business Corporations Act says that, except as otherwise provided in that Act, the transfer or transmission of a security is governed by the Securities Transfer Act. Section 106.1(2) says that Act does not apply to a transfer effected under section 227, 244, 291 or 300(7). Ask your lawyer how that second Act applies to delivering and registering the shares. BDC describes the representations and warranties section of a purchase agreement as where the vendor formally describes the condition of the business and makes disclosures about any issues or problems of which it is aware.

The central securities register

Section 111(1) requires a company to maintain a central securities register recording the shares it issues or transfers after the Act came into force, with the name and last known address of each person who received them, the class and any series, the number held, and the date and particulars of each issue or transfer. Under section 111(5), registering a transfer in that register is complete and valid registration for all purposes. The Act defines “registered owner” of a share as the person registered as its owner in the central or a branch securities register, with a separate rule for some pre-existing companies. Ask to inspect the register before signing.

The certificate and the transparency register

Under section 57(1)(e), a share certificate issued by a company must set out on its face, if the shares are subject to a restriction on transfer, a conspicuous statement that the restriction exists. Ask for the certificates and read that statement. Separately, the British Columbia government states that the Business Corporations Act requires private companies to create and maintain a transparency register listing the company’s significant individuals. Ask to see the register, and ask your lawyer how the sale affects it.