Your Guide to Resolutions for Authority to Act on a Share Purchase and Subscription Agreement

Last updated on January 8, 2020

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Once a Share Purchase Agreement (SPA) or a Share Subscription Agreement (SSA) has been entered into by the company, a resolution would typically be passed by the Board of Directors (the “Board”) to authorise a director or a senior employee to conduct the sale and purchase or subscription of shares.

A SPA refers to an agreement to purchase previously issued shares from a shareholder, whereas an SSA refers to an agreement to subscribe for shares being issued by the company in question.

Preamble 

The preamble to the resolution would usually describe in brief the details and objective of the transaction. For example, that the seller is presently the legal and beneficial owner of the shares and that the seller intends to sell the shares to the buyer.

Resolution to Authorise to Act on a SPA and SSA

The resolution would typically authorise the director or senior employee to perform all acts necessary to give effect to a SPA and SSA. Such acts include signing all ancillary documents and obtaining the necessary licences, authorisations and other regulatory approvals in relation to the proposed sale and purchase or subscription of shares.

In relation to any documents that would have to be in writing under seal, such as deeds, this resolution would grant the authority to either affix the company’s common seal, or rely on section 41B of the Companies Act which provides that a company may execute a deed without a common seal by signature:

  1. On behalf of the company by a director of the company and a company secretary;
  2. On behalf of the company by at least 2 directors of the company; or
  3. On behalf of the company by a director of the company in the presence of a witness who attests the signature.

Template for Resolution to Act on a SPA and SSA 

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