27. Any agreement or agreement relating to the intellectual property rights of the target company is not subject to disputes In practice, however, such a claim is possible if the buyer receives specific guarantees as precise as possible and the nature of the commercial activity of the acquired company and the information that the buyer receives during the transaction process, reflect. also during discussions with the seller and during due diligence (if it is carried out). Therefore, depending on the situation, these guarantees should cover general issues (e.B correct accounting, compliance with tax payment and filing deadlines), but also more specific issues that require the correct tax treatment of sensitive transactions (e.B. the correct application of reduced VAT rates, withholding tax), the preparation of complete transfer pricing documents or the keeping of all documents necessary to claim the 0 % tax rate for export transactions or intra-Community supplies of goods. Below, we look at general warranties and what they mean for a buyer under a stock purchase agreement. Problems often arise here when the correct conditions for awarding intellectual property are not included in service contracts, or the founders have engaged in undeclared work, have not signed PIIA agreements that transfer intellectual property to the company (see Snapchat), or have conducted initial research for a public university or government agency. Depending on the size of the agreement, this can be a problematic area due to patent trolls. The starting point for a buyer in a share purchase agreement is “caveat emptor”, i.e.
“let the buyer be careful”. The buyer will conduct a due diligence of the target company to find out as much as possible before handing over the transaction. To do this, the buyer obtains information from the seller through the use of warranties. In the event that the seller does not provide enough information, he may be faced with a violation of the warranty claim. He can avoid this by making the appropriate disclosures in a disclosure letter. At this point, it is worth mentioning the increasingly popular and important additional agreements that are increasingly associated with co-purchase contracts, that is, the tax descriptions that have already been mentioned at the beginning of this article. A tax return is a separate document signed by both parties with the SPA. This document comes from English law and is a very practical tool used by the parties to a transaction to specify the measures to be taken in the event of the occurrence of certain circumstances set out therein in tax matters. Since tax matters are currently a very sensitive aspect of transactions due to significant changes in the legislation and practices of tax authorities, a tax return generally provides that the seller is fully responsible for the company`s tax arrears relating to the period prior to the closing date of the transaction. Representations and warranties are more commonly referred to as “agents and warranties” or simply “agents”. If you do not understand the representatives, do not hesitate to ask your lawyer to explain it to you in simple English. In order to protect itself in the best possible way against existing or past tax arrears of the acquired company that arose before the acquisition, the buyer will generally attempt to obtain certain guarantees and/or compensation from the seller in tax matters….