Table of Contents

What is a Share Purchase Agreement?

A Share Purchase Agreement is a legal contract for the sale and purchase of shares in a company.

In this agreement, the seller gives extensive representations and warranties on the various aspects of the company being sold.

Under a Share Purchase Agreement, the buyer pays the purchase price and the parties execute share transfer documents at completion. It is important to check stamping requirements and procedures under the relevant jurisdiction.

Who drafts a Share Purchase Agreement?

It is drafted while buying or selling the shares. Normally it is drafted by the buyer who is interested in buying the shares of a company and it should clearly describe to whom and for how much the share has been sold.

Who needs a Share Purchase Agreement?

Any person or business engaged in buying and selling shares needs a share purchase agreement. For example: In a partnership firm if one of the partners has decided to leave the company and sell their shares then another partner can buy or acquire their share through this agreement.

What are the things to include in a Share Purchase Agreement?

A share purchase agreement helps businesses and individuals to buy and sell the shares. The important things to include  are:

Name of the buyer and seller: It is very important to disclose the name and address of both buyer and seller at the top of this agreement. The date on which both parties have agreed to buy or sell the shares is also written with their full address.

Representations and warranties of the buyer and seller: It should be clearly mentioned that the seller has transferred their rights and sold the shares under their name. any liability would be now under the responsibility of the new owner of the shares.

Dividend: Any dividend generated before selling the shares belongs to the seller and the dividend generated after buying the share would be earned by the buyer of the shares.

Applicable law: It should be clearly mentioned in a share purchase agreement under which governing or applicable law the shares have been sold. This will protect the legal rights of both buyer and seller of the shares.

Who decides how many shares a company can issue?

Normally when a company is starting its operation, the total number of shares that it can issue is decided. However, in some cases, those numbers need to be adjusted, at that time shareholders’ voters decide whether to increase or decrease the number of shares.

What are the common clauses in a Share Purchase Agreement?

Some common and must include clauses in a Share Purchase Agreement are: 
Parties: While there are usually just two parties, it is not unusual to have shares owned by several people. 

Conditions Precedent: At times, the completion of a share’s purchase could be conditional. For these cases, a conditions precedent is put into the agreement.

Agreement to sell and purchase the shares: This clause protects the buyer’s interest as it mentions the title to the shares he is buying as well as the goods he is to receive.

Price and consideration: The price to be paid should be mentioned and the detail should address some auxiliary issues, such as when the payment will be made, details of if the price is a fixed sum or can be subject to price adjustment, and so on.
Completion mechanics: All parties need to agree upon the timing, delivery, and completion mechanics. It can include post-completion formalities such as stock transfer forms board approvals, share certificates, etc).
Warranties, indemnities, and specified remedies: These are discussed in detail and set out in a separate schedule to the share purchase agreement.
Tax Provisions: Also known as a tax covenant, tax indemnity, or a tax deed, this clause offers the buyer protection from any tax liabilities that might not have been revealed earlier.
Confidentiality: This clause is put into effect after mutual decisions from both parties.


A share purchase agreement helps both buyer and seller to buy or sell the shares through legal means. It will clearly describe what is being sold, to whom, and for how much with any other duties and liabilities.

You Might Also Like

Along with this document, make sure you see these other templates in our library:

Stay compliant with the Zegal template library

Zegal legal template are meticulously crafted with the precision of AI and the expertise of seasoned human lawyers, providing a unique blend of speed and reliability.

You can trust that Zegal agreements are legally sound and fully compliant with current regulations.

Whether you're a startupSME, or a larger enterprise, Zegal contract management will automate and speed up your legal processes.

Using Zegal will reduce risk, save money, and improve efficiency. Let us take care of the paperwork so you can focus on running your business.

Don’t compromise on speed or compliance. Stay secure, compliant, and efficient with Zegal.

Related Documents

If you're creating a Share Purchase Agreement, you may also be interested in the following documents: