Atlas Legal completed a KRW 00 million share transfer agreement, designing seven key clauses to protect the seller in a deferred payment structure where shares transfer before full payment.
Project Overview
The client needed to transfer 00 shares worth KRW 00 million while receiving only 60% upfront due to the buyer’s funding constraints. Comprehensive seller protection mechanisms were required to secure the remaining 40% balance payment.
Earnest Money Exclusion and Penalty Clause
The agreement excludes Article 565 of the Korean Civil Act (earnest money provisions) from the initial 60% payment, preventing the buyer from unilaterally terminating the contract. Upon termination, the initial payment is forfeited as a penalty to the seller.
Joint Surety and Late Payment Interest
The controlling shareholder of the buyer entity was designated as joint surety with specified maximum liability and a three-year guarantee period. A daily late payment interest rate of 0.3% was included to incentivize timely balance payment.
Termination and Share Reversion Procedure
The seller’s termination right upon non-payment was secured, with the buyer obligated to notify the company of share register reversion. Authority to execute notification and share register amendments was delegated to the seller in case of buyer non-cooperation.
Company Value Preservation Obligations
The agreement specifies damages liability for company value deterioration caused by asset disposal, technology leakage, or business relationship changes during the buyer’s ownership. This protects the seller’s substantive interests even after contract termination.
Atlas Legal’s Expertise
Atlas Legal provides comprehensive advisory services across corporate transactions including share transfer agreements, shareholders agreements, and M&A contracts. We design customized agreements reflecting each transaction’s unique structure to systematically protect client interests.