A guide to share purchase agreements


Published by a ½Û×ÓÊÓƵ Corporate expert
Practice notes

A guide to share purchase agreements


Published by a ½Û×ÓÊÓƵ Corporate expert

Practice notes
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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

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Jurisdiction(s):
United Kingdom
Key definition:
Share purchase definition
What does Share purchase mean?

Under a share purchase, the buyer takes over ownership of the target company (ie where it acquires its entire share capital) carrying on the business, which comes with all of its assets, obligations and liabilities (whether or not the buyer was aware of them).

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