Stock (Shares) Purchase Letter of Intent

A stock (shares) purchase letter of intent is a pre-contract document sent to establish an agreement to purchase a limited number of shares from a company, corporation, or partnership. When sent to a privately owned company, the sender, who is the buyer, must draft the letter in accordance with the company’s operating agreement, corporate bylaws, or partnership agreement.

If you wish to buy shares from a company, a letter of intent is an excellent way of notifying the seller of your intentions, without necessarily getting into a binding agreement. Think of the document as a preliminary offer that may give rise to a final purchase agreement.

What to Include in a LOI to Purchase Shares?

It is crucial that a Stock (Shares) Purchase Letter of Intent set out all the parameters of the proposed agreement as it may act as evidence in the event of disagreements or litigation. Essentially, the letter should indicate the following:

  • The buyer’s and seller’s names
  • The legal name of the seller company
  • The total number of shares to be purchased
  • The total purchasing price and proposed payment plan
  • A timeline for closing the purchase and preparing a formal purchase agreement.
  • Any warranties or requirements made by each party
  • Authorizing signatures from both parties

Drafting Stock Purchase Letter of Intent

Follow the following steps when drafting your letter:

  • Provide the sender and recipient addresses, and the date of writing
  • Identify the ‘seller’ and ‘buyer’ by name
  • Mention the letter’s binding status
  • Briefly mention the seller company’s legal details
  • Identify the shares to be purchased by number and type
  • Propose a purchasing price and payment plan
  • Provide the terms for a formal agreement
  • Indicate the jurisdiction holding authority over the LOI
  • Provide a timeline for the acceptance of the LOI

Stock Purchase Letter of Intent – Format

{Date}

{Recipient’s Name}

{Company Name}

{Company Address}

{City, State, Zip Code}

Re: Letter of Intent for the Proposed Purchase of Stock

Dear {Mr./Mrs./Ms. Last Name},

Consider this a non-binding representation of the proposed purchase of {specify number} shares from your company, {company name}. I, {your name}, as the buyer, intend to buy {nature of shares} from you at {proposed price in dollars} no later than {deadline}.

The proposed terms for said contract will be as follows:

• {Statement on nature and amount of shares to be purchased}

• {Statement on proposed price}

• {Statement on proposed payment plan, including deposit requirement}

• {Statement requesting confidentiality}

• {Statement requesting exclusivity}

• {Deadline for signing a formal agreement}

This letter of intent shall be governed under the laws of {governing state}. With its signing, you agree to work on a binding agreement based on the stated terms, to be constructed by {deadline}.

I, hereby, agree to {illustrate your good faith}.

Sincerely,

{Buyer’s Name} {Buyer’s Signature}

{Seller’s Name} {Seller’s Signature}

Sample – Shares Purchase Letter of Intent

1 April 2031

Timothy Price

Price Motors

100 First Street

Los Angeles, CA 90098

Re: Letter of Intent for the Proposed Purchase of Stock

Dear Mr. Price,

I am writing to express my intent to purchase 2,000 shares from your company, Price Motors. I, Annabel Chase, as the buyer, intend to buy the specified number of A-class shares from you at a total purchasing price of $14,000 no later than 1 May 2031.

The proposed terms for the proposed contract will be as follows:

• I, the buyer, will purchase 2,000 A-class shares from the seller, Price Motors

• I, the buyer, will purchase said stock at a total price of $14,000

• The funds will be transferred as one instalment, with no deposit on the date of purchase

• The seller will be required to not disclose any negotiations regarding this transaction to third parties

• Upon signing of this LOI, the seller will be required to agree to not enter into similar discussions with another party

This letter of intent shall be governed under the laws of the State of California. With its signing, the seller will agree to work on a binding agreement based on the stated terms, to be constructed by 15 April 2031.

If no agreement is made and this letter remains unsigned by said date, the contents herein will be considered null and void.

I, hereby, agree to act in good faith so as to successfully execute a formal contract and/or close the proposed transaction.

Sincerely,

Annabel Chase

Shares (Stock) Purchase Letter of Intent — Word Template

Shares (Stock) Purchase Letter of Intent — Word Template

Key Takeaways

An effective Stock (Shares) Purchase Letter of Intent should cover all the projected details of the purchase agreement, including nature, number, and price of stocks. It should also have stipulations concerning exclusivity and confidentiality, to put the minds of all parties at ease.

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