A contract for the sale of an enterprise of a property complex

Feb, 03 2021

Contents:

The issue of entering into a contract for the sale of an enterprise of a property complex arises quite often and in many areas of entrepreneurship. The set of measures that make it possible to transfer a particular production to the client’s management involves its own characteristics, which will be useful to study both the supplier and the customer.

It should be noted that when it is alienated, the object of a trading operation is understood to be the entire process of the company’s professional activity, the purpose of which is to get profit.

Moreover, the phrase “sale of business ” should be understood as the transfer of a business entity, namely a company as a property complex, which is used in conducting business (according to the provisions of the Civil Code of the Russian Federation). Some of its components intended for the normal functioning of a particular production are below:

  • Real estate (buildings, land plots and other structures);
  • Movable property (raw materials, equipment, inventory, products);
  • Rights of claim, obligations;
  • Some exclusive rights (for example, on the means of individualization).

Grounds for entering into a contract for the sale of enterprise

Official document for the sale of the company, according to the Civil Code, requires a selling party to transfer the ownership to the buyer. 

If agreement is reached on all significant points of the contract, it will be considered concluded under Russian civil law. Therefore, it is necessary to clearly determine which provisions are essential when making a decision on this contract. They include the following:

  • information about the subject of the agreement itself; 
  • terms of the price.

The contract of sale of the enterprise is concluded in writing by drawing up a single document signed by the parties. At the same time, a special requirement is imposed on the contract of sale of enterprise – such a contract is subject to mandatory state registration. If this requirement is not met, the contract is considered not concluded.

The algorithm of business property complex sale

In order to carry out activities on sale of company in favor of counterparty, it is necessary to get familiar with all stages of drafting the contract:

  • define what is included and what is the cost of enterprise being sold;
  • enter into a legal contract of purchase and sale;
  • notify creditors;
  • carry out the procedure for its transfer;
  • register the legality of the transfer of ownership.

Inventory management

Initially, the entrepreneur needs to conduct a complete inventory of the property in order to determine the content and value of the overall whole. The process itself includes the preparation and review of the inventory report, the balance sheet. The purpose is to ensure the reliability of actual data and accounting information. 

Everything is carried out without fail and implies a specific sequence of actions:

  • to check the availability of products, 
  • evaluation of its quality,
  • state of the company’s financial debts.

In some cases, it is necessary to get a report from an independent auditor containing a conclusion about the composition and cost, a list of all debts, indicating to whom they were owed, the nature of such debt, the amount and maturity of all claims. Such work should be carried out in advance before the contract is drawn up and signed.

Creditors 

The next item is a specific written notice to the creditors on the debts that the company has. After informing, creditor has the right to:

  • give consent for the transfer of debts; 
  • insist on the termination of obligations ahead of time, in case of losses – to demand compensation from the seller, and also there is an opportunity to invalidate part or all of the text. 

The period for exercising the above-mentioned powers of the creditor is three months from the date of receipt of the relevant notification. However, in situations where it has not been received, the lender has the opportunity to file a claim, which implies the satisfaction of certain orders within one year from the date on which he was informed or should have known about this case.

Transfer certificate 

Then the seller transfers the company to the customer. In such a procedure, an important role is played by the transfer act, on the basis of which the case is drawn up. From the moment when it was signed, the institution is considered to be transferred to the acquirer. It contains the following information: 

  • composition and information about the detected defects of the sold product; 
  • notification of lenders about the change of ownership of the company; 
  • a list of goods that were not transferred due to loss. 

At the final stage of the transaction of sale of enterprise, the institution of justice at the place of official registration of the company registers the legal contract and the transfer of ownership.

Responsibility and obligations of the seller and the buyer

The seller is solely responsible for preparing the company for the sale and drawing up the contract. Moreover, it bears all the costs that are associated with the implementation of the listed items. 

After the transfer act is signed and everything is actually transferred to the acquirer, only he is responsible for unintentional damage or accidental damage to the products that were alienated in his favor. 

Thus, the key obligation of the seller under the contract is the alienation of the object in favor of the purchasing party. In addition, he must hand over the assortment in proper condition, in accordance with the terms of the agreement. The client, in turn, can demand from the businessman an assortment of proper quality, and in case of non-compliance with this requirement, has the authority to file a claim to the court, seeking protection of their legitimate interests.

What to do if you bought a complex with disadvantages

It is impossible to exclude from the experience such situations when, as a result of the registration of a business sales agreement, the buyer accepts the goods with some shortcomings that can negatively affect the implementation of business activities. 

In the event that the transfer act, according to which the company was placed under the jurisdiction of the acquirer, contains information about the detected defects of the products, in other words, if he was aware of these violations, he has the right to demand a certain reduction in the purchase price of the company.

If the product does not meet the provisions of the provided document, including the state of the product and unaccounted debts, the counterparty has the opportunity to:

  • refuse to pay for what you received;
  • demand to transfer the missing quantity of the assortment;
  • when making a payment, insist on a refund of the amount of money paid.

The customer, who was transferred to the objects of poor quality, may demand a reduction of the purchase price; elimination of deficiencies of products in a certain period of time free of charge or a refund on their elimination.

At the same time, the correct action of the buyer, who discovered the defect of the products, will be to notify the entrepreneur of this fact. The latter should immediately correct the current situation, and, in this way, avoid the possible negative consequences of violating the official agreement.

If there is a significant violation of the requirements for the quality of the goods, the customer can:

  • refuse to comply with the terms of the contract and insist on a refund of the amount paid;
  • require the replacement of the product of improper condition with an acceptable one.

There are special cases in which significant defects in the products lead to the impossibility of further use of the point for the purposes specified in the provisions, and the seller refuses to eliminate them, or it is not possible. In such a situation, the buyer needs to terminate or change the contract for the sale of enterprise in judicial order and return already received items.

Decisive criteria for the conclusion of contract for the sale of company

To summarize the above, it is necessary to present the basic criteria for a contract.

  • The company is recognized as real estate.
  • The relevant official document must be registered by the state.
  • The transfer of ownership is also subject to state registration.
  • The risks that the client takes are minimized due to the guarantees established by law.
  • When making arrangements, the interests of creditors should be taken into account.

Additional payments

In addition, it will be useful to indicate what tax consequences an entrepreneur can expect. This process, according to the norms of Russian tax legislation, is accompanied by the mandatory payment of value added tax. The peculiarity of taxation when selling an organization in favor of a counterparty is that the VAT tax rate is 16.67 %. As for the customer, he pays a state fee of 0.1 percent of the cost of the institution, however, its total amount cannot exceed 30,000 rubles.

Recommendations

In conclusion, please refer to the following tips that will help you stay competent when performing such operations. So what should be done before signing?

  • It is necessary to analyze the work of the company from a legal and financial point of view.
  • Work out in detail all the essential terms of the agreement and clearly reflect them in the document.
  • Carefully consider with the buyer a detailed algorithm of actions for the transfer of the company.
  • Finally, agree on all the conditions that fully satisfy the interests of both the businessman and the counterparty of the trading operation.

Thus, the conclusion of a transaction for the sale of enterprise of a property complex is a multi-faceted issue that is associated with multiple material and other risks. Only the professional help of a lawyer will help you to minimize them. Moreover, Russian civil law requires compliance with many rules when making a contract, which is also unattainable without legal assistance, since violating them can lead to extremely negative consequences for both parties.

Author of the article
A contract for the sale of an enterprise of a property complex
Valentina Khlavich
Managing Partner
Send Request
By clicking on the button "Submit", you give your consent to the processing of your personal data and agree to the privacy policy.