When two parties agree to a share purchase agreement, it is important to ensure that the transaction is secure and that both parties receive what they agreed upon. This is where escrow comes into play.
An escrow account is a secure account that holds funds or assets until the transaction is completed or certain conditions are met. In the case of a share purchase agreement, the escrow account holds the purchase price until all terms of the agreement are fulfilled.
The use of an escrow account benefits both parties in the transaction. The buyer is assured that the funds will not be released until they have received all of the shares they purchased, and the seller knows that the funds are secure until the transaction is complete.
The escrow period can vary depending on the terms of the agreement and can be extended if necessary. This provides flexibility and allows both parties to ensure that the terms of the agreement are met before the funds are released.
It is important to note that the use of an escrow account does come with fees, which are typically split between the buyer and seller. However, these fees are worth the added security and protection they provide.
In conclusion, when entering into a share purchase agreement, it is important to consider utilizing an escrow account to ensure a secure and fair transaction. While there are fees associated with escrow, the added protection and peace of mind for both parties make it a worthwhile investment.