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This Share Purchase Agreement is made on the last day of signature.
(1) , a company incorporated in with registered number whose registered office is at , (the Seller); and
(2) , a company incorporated in with registered number whose registered office is at , (the Buyer).
The Seller has agreed to sell and the Purchaser has agreed to purchase the Shares on and subject to the terms and conditions of this Agreement.
A day, other than Saturday, Sunday or a public holiday, on which banks are authorised to close in London.
, a company incorporated in with registered number whose registered office is at , , further details of which, are set out in Schedule 1.
Completion of the matters described in this Agreement (including the sale and purchase of the Shares) by the performance by the Parties of their respective obligations.
The date of this Agreement or such other time as the Parties may agree.
The sum to be paid to the Seller at Completion by the Buyer.
The Letter dated the same date as this Agreement produced by the Seller and addressed to the Buyer that discloses relevant matters in respect of the Warranties, qualifying them accordingly.
Fair, true and accurate disclosures against the Warranties that relate to the subject matter of the relevant Warranty and are provided in a way that enables the Buyer to make a clear, informed and accurate assessment of all facts and risks.
ordinary shares of £1 each in the capital of the Company, being the entire allotted and issued share capital of the Company.
The warranties set out in Schedule 2 and Warranty means any one of them.
As defined in section 1 of Schedule 3.
The parties have signed the Agreement on the date(s) below:
Date of incorporation
Place of incorporation
Issued share capital
Accounting reference date
*Subject to terms and conditions
This Share Purchase Agreement template covers:
details of the target company (ie the company being purchased)
the purchase price for the shares
when completion of the Agreement will take place
warranties made by the seller and buyer
representations made by the seller and buyer
restrictions on the seller post-completion
A Share Purchase Agreement helps finalise all the agreed terms and conditions of the sale of the shares in a company.
A Share Purchase Agreement can be necessary to ensure that the parties are aware of any representations or warranties made about the target company. When a buyer is purchasing all of the shares in a company, they are also buying all of the obligations and responsibilities of the company, including any debts or liabilities.
As a share buyer, use this SPA to make sure the seller enters into some contractual promises about the company which will continue to bind them after the sale. You should use this SPA where both the seller and buyer are companies (ie not private individuals). Ask a lawyer for assistance if this is not the case.
Warranties are statements of fact, or promises, that parties give to assure the another party that certain conditions are true. Warranties are very important in any Share Purchase Agreement as they reduce the risks imposed by a share sale for the buyer.
One of the main aims of the warranties is to provide the buyer with a potential remedy if a statement about the target company turns out to be untrue, which changes the true value of the target company.
Warranties can highlight any information that the buyer ought to know and which could affect the value of the company or even the buyer’s decision to buy the business. Using warranties also acts as an information-gathering mechanism for the buyer and assists in any due diligence undertaken prior to completing the share sale. This can give the buyer some comfort in the event that the business is not as the seller has represented it to them, eg if the company has some hidden problems or faces upcoming litigation.
If a warranty turns out to be untrue, for example, a warranty that the target company is not currently in any litigation, then this can result in a successful claim for damages. The buyer will need to show that the breach of warranty resulted in a substantial loss (ie a reduction in the value of the target company).
For more information, read Warranties in share purchase agreements.
The law does not provide much protection for buyers and sellers in a commercial context (ie in business transactions). There is a well-known principle of 'caveat emptor' (or buyer beware), which states that it is the buyer's obligation to know all of the facts and details of what they are buying.
As a result, buyers would seek to protect themselves by obtaining all of the information about the company and receiving assurances from the seller relating to the assets and liabilities of the target company. Therefore, warranties are very important provisions in most, if not all, Share Purchase Agreements.
Ask a lawyer if you need assistance understanding any warranties contained within this Agreement.
A disclosure letter gives a seller the opportunity to make ‘disclosures’ against the warranties which the buyer will require the seller to give.
The seller can make two types of disclosures: general and specific disclosures.
General disclosures cover certain matters that appear in public records and/or of which the buyer ought to be aware on the basis of pre-contract enquiries or searches actually made or that a buyer would normally make. These should be included in the letter.
Specific disclosures cover anything which, if not disclosed, would constitute a breach of warranty. The specific disclosures should be made by reference to the warranties themselves. These will be for you to include after you have created your Asset Purchase Agreement document. Ask a lawyer if you have any questions about how to draft these.
If a seller makes inadequate disclosures, it may face breach of warranty claims, which could allow the buyer to recover some or even all of the purchase price.
The consideration is the purchase price payable by the buyer for the shares in the target company. When completing a share sale it's important that the true value of the target company is reflected in the Agreement. It's usual for the parties to obtain a valuation of the target company through completion accounts and references to annual and management accounts. This helps the purchase price to be adjusted in the event that the value of the target company changes.
The buyer of a share sale may want to impose restrictions on the seller after the sale is completed. Typical restrictions include the seller agreeing to not be involved in any competing businesses and to not solicit any customers, suppliers, or employees of the target company. These restrictions are included to protect the buyer and the target company. A buyer will want to ensure that the seller doesn't do anything after the completion of the sale that could adversely affect the value of the target company.
However, it's important to ensure that the restrictions are reasonable and are not a restraint of trade in order for them to be enforceable. Therefore, the restrictions should be limited in terms of scope (both geographically and functionally) and time. The usual duration is between 1 and 5 years.
For more information, read Non-solicitation and restrictive covenants.
Limitation of liability clauses limit the amount one party has to pay another party if that party suffers loss because of the first party’s breach of a contract between the parties. It is usual for a seller to limit its liability under a Share Purchase Agreement, specifically in relation to the warranties, and this is usually accepted by the buyer. For more information, read Limitation of liability clauses.
If the buyer buys a company by means of a share sale and purchase, the buyer takes on the shares in the target company. The buyer will acquire the target company with all of its assets and liabilities. A share sale can be more straightforward than an asset sale, although extensive due diligence will need to be conducted to uncover and investigate any liabilities that will come with the company that’s being purchased. In an asset sale, any liabilities will generally be left behind with the target company from which the assets were purchased.
If a buyer buys a business as a going concern by means of an asset sale and purchase, all of the individual assets of the business concerned will be transferred to the buyer together with the goodwill of the business. This means that the buyer can decide which assets in the target company it will purchase and can leave behind any liabilities, such as debts and pending litigation.
Generally, shareholders (ie members) have a right to transfer or sell their shares to whomever they want. However, certain provisions in a company’s Articles of association may restrict this right where there is:
a provision that the board of directors should have the power to refuse the register of shares, or
a pre-emption clause which obligates a member to first offer to sell their shares to other specified members or directors
In these cases, you should check your articles of association or Ask a lawyer if you require assistance in reviewing your documents.
Making a Share Purchase Agreement online is simple. Just answer a few questions and Rocket Lawyer will build your document for you. When you have all of the details prepared in advance, making your document is a quick and easy process.
To make your Share Purchase Agreement you will need the following information:
What are the details of the seller company (ie the name, registered number and address of the company selling the shares)?
Who will sign the SPA on the seller company’s behalf?
What are the details of the buyer company (ie the name, registered number and address of the company buying the shares)?
Who will sign the SPA on the buyer company’s behalf?
What are the details of the target company (ie the name, registered number and address of the company being purchased)?
What is the date of incorporation of the target company?
Was the date of incorporation before 1 October 2009?
If the target company was incorporated before 1 October 2009, what is its authorised share capital?
What is the target company’s issued share capital?
What are the details of any company directors?
What is the target company’s accounting reference date?
Does the seller agree to sell the shares with a full or limited title guarantee?
What is the purchase price for the shares?
After the sale is complete, what is the seller restricted from doing and, where relevant, for how long and in what areas?
To what address will any notices or other communications made to the seller under the Agreement be sent?
To what address will any notices or other communications made to the buyer under the Agreement be sent?
What is the seller’s maximum liability in respect of warranty claims?
If the seller, the buyer, or the target company are based in Scotland, which country's laws will apply to this Agreement?
SPAs are used to finalise terms relating to the sale and purchase of shares in a company. To achieve this, this SPA template covers:
The start of the SPA provides details of the parties to the Agreement. It sets out who the seller and buyer companies are and clarifies that the date of this Share Purchase Agreement is the day of the last signature.
This section sets out that the seller had agreed to sell the shares and that the buyer has agreed to purchase the shares in accordance with the terms of the Agreement.
Definitions and interpretation
This section provides the meanings of certain key terms used throughout the Agreement. Examples include ‘Company’, ‘Completion’, ‘Consideration’, ‘Shares’ and ‘Warranties’.
Agreement for sale and purchase of shares
This section outlines the agreement for the sale and purchase of the target company’s shares. Specifically, it clarifies that the seller will transfer the shares to the buyer on completion of the purchase and explains on what guarantee (full or limited) the shares are being transferred.
This section sets out what the purchase price for the shares is and how it should be paid.
This section sets out when the sale will be finalised (ie completed) and what steps the seller and buyer must take on completion.
This section sets out certain warranties the seller makes to the buyer in relation to the shares and the target company. Warranties are essentially legally enforceable promises. This section makes reference to Schedules 2 and 3, which provide the specific warranties applicable to this Agreement and limitations to those warranties. For more information, read Warranties in share purchase agreements.
This section will only appear if the seller is restricted from doing certain things after the sale of the shares. For example, setting up a competing business or dealing with the buyer's customers. If relevant, this section provides details on the specific restrictions placed on the seller. This includes their time limitations and geographical limitations.
For more information, read Non-solicitation and restrictive covenants.
This section requires both parties to (at their own cost) take all necessary steps to implement the provisions of the Agreement. This includes obtaining further documents and performing certain essential tasks.
This section sets out how any notices and other communications made under this Agreement must be sent to the buyer and seller. This includes details on:
all notices needing to be made in writing
the addresses all communications should be sent to
when notices will be deemed to have been received by the other party
Time of the essence
This section highlights that time is of the essence and that every time period mentioned in this Agreement is important and should be complied with.
This section sets out that the parties will pay their own costs and expenses in connection with the negotiation, preparation and implementation of this Agreement. It also states that the buyer is responsible for the payment of stamp duty on the share purchase.
This section explains that both parties may have access to the other’s confidential information and explains that neither shall disclose this information without the other’s prior written consent. This section also provides details on when information will not be considered confidential and how it should be treated after the Agreement ends.
This section covers various other points of law that govern how this Agreement operates. These are often known as ‘boilerplate clauses’ and include:
only allowing amendments and variations to the Agreement to be made in writing
the SPA constituting the entire agreement between the parties
the jurisdiction of the Agreement (ie which country’s legal system must be used to resolve any disputes)
Schedule 1 - company details
This schedule sets out details relating to the target company (ie the company which is being sold and bought). This includes its date of incorporation, the names of its directors, its issued share capital and its accounting reference date.
Schedule 2 - warranties
This schedule sets out the warranties the seller is making to the buyer in relation to the shares. Warranties are contractual statements given by a seller to a buyer, assuring the buyer that a certain state of affairs exists. Warranties are a crucial part of a SPA as they allocate risk and liability between the parties.
For more information on these warranties and what they mean, read Warranties in share purchase agreements.
Schedule 3 - limitations on the warranties
This schedule should be read together with Schedule 2 as it provides limitations on the warranties made in Schedule 2. These limitations seek to protect the seller by limiting the scope of the warranties made.
If you want your Share Purchase Agreement to include further or more detailed provisions, you can edit your document. However, if you do this, you may want a lawyer to review or change the Agreement for you, to make sure it complies with all relevant laws and meets your specific needs. Ask a lawyer for assistance.
Understand when this document should be used
This Share Purchase Agreement should be used to buy the entire share capital (ie all shares) in a private limited company (LTD). By buying the entire share capital, the buyer buys the company as a whole, along with all of its assets and liabilities. Further, this SPA assumes that both the buyer and seller are LTDs.
Ask a lawyer for assistance if:
the seller and/or buyer is not a company (eg where a single shareholder is selling their share capital)
you want to buy some shares in a company
the target company isn’t an LTD (ie if it is a public company)
If you want to buy certain business assets only (eg some company equipment), you should use an Asset purchase agreement instead of an SPA.
For more information, see the FAQ ‘What is the difference between a share sale and an asset sale?’.
Remember to comply with all relevant post-completion requirements
After the completion (ie signing) of the Agreement, the buyer will need to take several different steps. These include:
filing all necessary notices with Companies House (eg notices of directors’, secretaries’ and auditors’ appointments)
notifying Companies House of the change to the target company’s share ownership in its next annual tax return
Understand when to seek advice from a lawyer
Ask a lawyer for advice:
if the buyer and/or seller are not companies
if you're unsure of the warranties being made
if you're unsure of the restrictions being imposed on the seller
if you need help with due diligence
if you need help making a disclosure
on drafting bespoke terms in a Share Purchase Agreement
on tax considerations when buying shares
if the target company is based outside of England, Wales and Scotland
if the target company is a public company