Hello, I’m Attorney Kyusung Lee from Weon Law.

As a startup and corporate specialist attorney registered with the Korean Bar Association and a Certified Anti-Money Laundering Specialist (CAMS), I have successfully consulted on and executed a range of corporate mergers and acquisitions.

Having attended a private boarding school in the United States and Brown University there, I developed a strong command of English, particularly in drafting English-language contracts, which sets me apart in my practice.

Today’s post covers the Share Purchase Agreement (SPA), and I also offer support in drafting, translating, and reviewing international trade, technology transfer, and supply agreements. Please feel free to reach out if you need assistance.

Consult with Attorney Kyusung Lee for International Contract Assistance
Tel: +82 2-6264-7604

What is M&A?
Mergers and Acquisitions (M&A) refers to the process of transferring business control or merging multiple companies or operations into one.

While there are various ways to transfer management rights, share acquisition is among the most frequently used.

This is achieved by drafting a Share Purchase Agreement (SPA) and acquiring existing or newly issued shares of the target company, a method often used in small and medium-sized business M&A.

About the Share Purchase Agreement (SPA)

The Share Purchase Agreement (SPA) goes beyond simply stipulating the transfer of shares. It includes essential details, such as confirming the financial and operational soundness of the company and reaching agreements on the succession of employees for the transfer of management rights.

Although the specifics may vary depending on the deal structure, certain provisions are essential. Let’s review these essential clauses and key points to keep in mind.

Essential Clauses in Drafting an SPA

① Condition Precedent: A provision relieving the parties of the obligation to complete the transaction if certain conditions are not met.
This includes conditions necessary to perform the contract but beyond the control of the parties, such as the non-existence of restrictive regulations or litigation, or obtaining government approvals. If these conditions are unmet, one may not be obligated to fulfill their duties.

② Covenant: A provision stipulating the obligations that one party agrees to fulfill for the other.
Depending on whether the covenant is due before or after closing, it is classified as a Pre-Closing Covenant or Post-Closing Covenant. The former is particularly important as failure to fulfill it before closing can release the other party from their obligation to close the transaction.

③ Representations & Warranties: A provision guaranteeing that there are no issues with the transaction.
The scope and duration of these representations and warranties can be negotiated between the parties.

④ Indemnification: A clause outlining liability for damages if there is a breach of contract.
Like in other contracts, the scope and amount of liability can be negotiated between the parties.

Key Considerations When Drafting an Cross-Border SPA

When handling international contracts, familiarity with the laws and languages of other countries or international law is essential for a thorough and safe review.

Can fluency in language alone suffice for drafting and reviewing cross-border deal contracts? Not quite.

There are differences between everyday English and the language used in legal documents, and a high level of legal knowledge is necessary beyond language skills alone.

Therefore, it’s advantageous to seek the assistance of an attorney with international experience and a solid understanding of international law.

If you need help, please don’t hesitate to reach out for a consultation.

Contact

Attorney Kyusung Lee

Email: kslee@weonlaw.co.kr

Tel: +82 2 6264 7604