Share purchase transactions (EHS issues)—post completion environmental tasks
Share purchase transactions (EHS issues)—post completion environmental tasks

The following Environment guidance note provides comprehensive and up to date legal information covering:

  • Share purchase transactions (EHS issues)—post completion environmental tasks
  • Deal with any environmental health and safety (EHS) issues highlighted in the legal due diligence report
  • Address any EHS issues that have been identified in an environmental audit
  • Make notifications to regulators regarding change of control
  • Obtain reliance letters or collateral warranties in respect of environmental reports
  • Commission an environmental audit

For more information, see Checklist: Post-completion environmental issues (share purchase)—checklist.

Deal with any environmental health and safety (EHS) issues highlighted in the legal due diligence report

Legal due diligence reports and share purchase agreements (SPAs) will sometimes set out specific issues that need to be dealt with post-completion.

Actions can include the following:

  1. carrying out a baseline phase 2 environmental audit

  2. undertaking a phase 1 compliance audit to rectify items raised during due diligence

  3. preparing an asbestos management plan

  4. addressing recommendations in a fire risk assessment or legionella report

The buyer will undertake these tasks having control of the property.

The SPA can include mechanisms for the seller’s lawyers to have input in the post-completion work, such as:

  1. agreeing the scope of work for any environmental audits

  2. having access rights to complete certain works, and/or

  3. for the seller to pay the costs incurred by the buyer

See Precedent: Environmental rectification work clause.

Address any EHS issues that have been identified in an environmental audit

The key technical findings and recommendations may already have been incorporated in the legal due diligence report mentioned above.

Post-completion actions recommended by environmental reports can include a wide variety of issues, some of which may be more technical in nature, for example:

  1. remove underground storage tanks

  2. capex upgrades to septic tanks

  3. improvements to bunding for above ground storage tanks

While