A guide to share purchase agreements

The following Corporate practice note provides comprehensive and up to date legal information covering:

  • A guide to share purchase agreements
  • Consideration
  • Adjustment of the purchase price post-completion
  • Non-cash consideration
  • Deferred payment of the consideration
  • Completion
  • Simultaneous exchange and completion
  • Conditional completion
  • Pre-completion undertakings
  • Termination provisions
  • More...

A guide to share purchase agreements

This Practice Note provides an overview of the agreement for the sale and purchase of shares in a private limited company (target): the share purchase agreement (SPA).

The SPA records the terms by which the buyer agrees to purchase from the seller(s) shares in the capital of the target (sale shares): either the entire share capital of the target or a partial share sale. The buyer agrees to pay to the seller the purchase price for the acquisition of the sale shares (consideration) in return for which the seller transfers title in the sale shares to the buyer (by executing a stock transfer form). This takes effect at completion of the transaction (completion), which will occur either at the same time that the SPA is executed or upon an agreed later date (where there are conditions to completion, see further below).

Since the buyer acquires title to the sale shares upon completion, it also thereby acquires all liabilities attaching to the target. The buyer will be concerned to ensure that it obtains ‘full title guarantee’ from the seller (whereby the seller covenants that it is able to transfer title to the buyer free from encumbrances and any third party claims). The allocation of risk for the target’s liabilities, necessarily impacting on its prospects post-completion, is at the

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