Share Purchase Agreement

What is a Share Purchase Agreement?

A share purchase agreement (SPA) is a legal contract between a seller and a buyer that details the terms and conditions of the purchase and sale of shares in a company.

This agreement outlines information about the buyer and the seller, the price of the shares, the amount of shares being sold, and any warranties or representations of both parties.

What are the benefits of creating a Share Purchase Agreement?

1. Protection for Both Parties: SPAs protect both the buyer and the seller. The buyer gets assurance about the condition of the business, and the seller gets protection from future legal claims.
2. Certainty of Transaction: Once signed, SPAs provide certainty to both parties that the transaction will proceed on the agreed terms and conditions, providing security and peace of mind.
3. Defined Legal Recourse: A well-drafted SPA will contain indemnification clauses that clearly set out the recourse a buyer or a seller may have post-closing if there are breaches of the agreement.
4. Clear Terms: The agreement spells out all the specifics about the transaction, including the price, the number of shares being sold, and any warranties or representations. This reduces the potential for misunderstandings or disputes later.
5. Confidentiality: SPAs often include confidentiality clauses that protect sensitive business information that is disclosed during the sale process.