Share Purchase Agreements - A short guide

Share Purchase Agreements (SPAs) are essential in transactions involving the transfer of ownership in a company. They are comprehensive legal documents that outline the terms and conditions when two parties are looking to buy or sell the shares of limited companies.

Whether in the context of mergers, acquisitions, or investments, SPAs play a pivotal role. They outline the rights, obligations, and responsibilities of both buyers and sellers.

Expert Commercial Law offers access to a specialised panel of experienced solicitors proficient in handling share purchase agreements. For further details and consultation with our legal professionals, please contact us today.

What is a Share Purchase Agreement?

At its essence, a Share Purchase Agreement serves to formalise the agreement reached between parties regarding the transfer of shares. It outlines crucial details such as the purchase price, the number of shares being sold, representations and warranties of both parties. It also outlines the methods for dispute resolution.

Given the complex nature of corporate transactions, SPAs are created to address the unique needs and concerns of each party involved. Furthermore, SPAs serve as invaluable tools for establishing a framework for negotiations. They facilitate due diligence processes, and ultimately, formalise the transfer of shares in accordance with the agreed terms.

What is the Share Purchase Agreement process?

The Share Purchase Agreement process involves several key steps that are typically followed when parties engage in a transaction for the sale and purchase of shares in a company. While the specifics may vary depending on the transaction and parties involved, the general process often includes the following stages:

Negotiation and Preparation of the SPA:

The process begins with negotiations between the buyer and seller, facilitated by their legal and financial advisors. During this stage, key terms and conditions of the transaction are discussed and agreed upon. The buyer’s legal representatives usually draft the initial SPA, which outlines the agreed-upon terms of the transaction.

Due Diligence:

Prior to finalising the SPA, the buyer conducts due diligence to assess the financial, legal, operational, and commercial aspects of the target company. This involves reviewing relevant documents, contracts, financial statements, legal records, and other information to identify any potential risks, tax liability, or opportunities associated with the transaction.

Revision and Finalisation of the SPA:

Based on the findings of the due diligence process and ongoing negotiations, the SPA is revised as necessary to address any issues or concerns raised by the buyer or seller. Both parties work together, often through their legal representatives, to finalise the SPA and ensure that it accurately reflects the terms of the agreement.

Signing of the SPA:

Once the SPA has been finalised and agreed upon by both parties, they proceed to sign the document. The signing of the SPA represents the formal agreement between the buyer and seller to proceed with the transaction according to the terms outlined in the agreement.

Key clauses in a Share Purchase Agreement

Price and payment

While share sale transactions can be straightforward in some cases, they may not always follow a simple process. It is quite typical for these transactions to include various forms of consideration, which could include the use of loan notes or deferred payments based on an earn-out structure.


In most share purchase contracts, sellers typically seek to limit the warranties provided, which are included in all SPAs. Warranties are statement of fact made by the seller, and if found to be inaccurate, give the buyer legal rights and remedies. Common warranties often apply to the accuracy of financial statements or the seller’s lack of knowledge regarding potential legal disputes.

Restrictive covenants

Restrictive covenants can be included in the terms of a Share Purchase Agreement. Restrictive covenants serve to prevent a seller from engaging in competitive activities with the buyer following the sale.

These provisions may include clauses that prohibit the buyer from operating within the same industry or region, or prevent the seller from soliciting the buyer’s employees, clients, or suppliers for business purposes.

Certain restrictive covenants are implicitly enforced by law, such as those aimed at preventing the seller from disclosing the company’s trade secrets or misrepresenting their association with the company post-sale. However, the scope of these covenants is limited, so the advice of a legal professional is essential.

While restrictive covenants can be used to protect the buyer, they must be crafted to avoid being deemed excessively broad, which could mean they would be set aside in law for being unreasonable.


Indemnities are designed to address specific circumstances where the seller agrees to fully reimburse the buyer if certain scenarios occur. For instance, if a legal dispute emerges post-completion that relates to a situation predating the completion of the transaction, the seller reimburses the buyer entirely. Indemnities serve as legal safeguards for buyers, offering them considerable protection in transactions.

How can solicitors assist in Share Purchase Agreements?

Solicitors play a crucial role in assisting parties involved in share purchase agreements (SPAs) by providing legal guidance, expertise, and support throughout the transaction process. Here are several ways solicitors can assist in share purchase agreements:

Drafting and Reviewing Legal Documents:

Solicitors are responsible for drafting, reviewing, and finalising the share purchase agreement (SPA) to ensure that it accurately reflects the intentions and agreements of the parties involved.

Negotiation and Structuring of the Transaction:

Solicitors negotiate on behalf of their clients to ensure that the terms of the SPA are fair, equitable, and favourable to their interests. They advise on the structuring of the transaction, including considerations such as purchase price, payment terms, conditions precedent, and post-closing obligations.

Legal Compliance and Regulatory Requirements:

Solicitors ensure that the share purchase transaction complies with all applicable laws, regulations, and industry standards. They provide guidance on regulatory requirements, filings, approvals, and disclosures that may be necessary to complete the transaction successfully.

Risk Management and Mitigation:

Solicitors help identify, assess, and mitigate risks associated with the share purchase transaction. They advise their clients on strategies to minimise exposure to potential liabilities and disputes.

Why choose Expert Commercial Law?

If you are looking for more information regarding Share Purchase Agreements and stock transfer in the UK, then our panel of solicitors can assist you.

All of the commercial dispute solicitors on our panel have the experience and expertise required to take on your case. Each solicitor is vetted before being allowed onto our panel, and we only select the best in the business. All of our solicitor firms are authorised and regulated by the Solicitors Regulation Authority (SRA).

Our solicitors also help with other commercial claims, such as breach of contract and CCJ removal.

Please note we are not a firm of solicitors; however, we maintain a panel of trusted and regulated legal experts. If you contact us in relation to a commercial law case, we will pass your case on to a panel firm in return for a fee from our panel firms. We will never charge you for passing on your case to a panel firm.

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Please note, we are not a firm of solicitors; however, we maintain a panel of trusted and regulated legal experts. If you contact us in relation to a commercial law case, we will pass your case onto a panel firm in return for a fee from our panel firms. We will never charge you for passing on your case to a panel firm. 


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