Share Purchase Agreement

Rs.6,999/-



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A Share purchase agreement Format (SPA) is a formal agreement between a purchaser of shares in the company and the buyer, laying down the required terms and conditions. This type of transaction shall include the purchase of a part of the company’s operating business. Upon the transfer of shares as per the agreement’s terms, the ownership shall pass on to the buyer. It shall bring to the buying of a certain amount of control and powers in the target business.

Through a Share Purchase Agreement, the buyer steps in the place of the seller. The other elements of the company contracts, properties etc do not alter in any manner. A share sale/ transfer thus involve no third party involvement and thus it is a discreet transaction. Also, in share sale/ transfer, the seller gives up the liabilities of his part (of debts of the business) to the buyer.

Advantages of Share Purchase Agreement


  • The Agreement is being formally executed for sale of shares makes the transaction legally accurate and organized by clearly laying out the expectations of the parties.
  • Bring detailed, they cover all the areas involved in the transaction thus making it unambiguous and reduces the possibility of confusion in future.
  • It facilitates the companies to maintain a record of shareholders and includes them in the processes of decision making.
  • Such agreements help the appropriate authority to maintain track of similar transactions and enforcing them.
  • Such a legal framework protects the rights and interests of both the seller and the purchaser to minimize the risk of getting conned.

Share Purchase Agreement Procedure


  • A well efficient lawyer from our team shall contact you, and explain you the total process, and will understand the need of Share Purchase Agreement to be executed by you.
  • Once the objectives of the same are clear, the lawyer shall draft a sample Share Purchase Agreement accordingly.
  • The draft Share Purchase Agreement shall be sent to you, for your review.
  • The whole process takes around 3-4 working days.

FAQ’s

SPA may be executed between a single buyer and seller or may be between a single seller and multiple buyers. In case of multiple buyers, if they are companies created only for the purpose of effecting an SPA (or Shell Companies), thus lacking administrative or financial credibility, it is essential to ensure that heads of such companies (or Principals) are made Covenants/Guarantors so as to protect the compensation or payment in cases of non-payment or fraud of any kind.

  • 1. RECITALS: Though is not legally required, yet mentioned because it lays down the basic context of the agreement
  • 2. The agreement must mention the complete details of the parties, accurately.
  • 3. The number of shares involved in the transaction and any other details of the said shares.
  • 4. The PURCHASE PRICE of the shares as considered to be fair to both the parties.
  • 5. The MODE OF PAYMENT of the purchase price as mutually agreed upon.
  • 6. THE CLOSING MECHANISM- City, Date, Time and the duration within which the procedures be concluded
  • 7. The REPRESENTATIONS AND WARRANTIES of the Buyer/s and Seller.
  • Warranties are contractual statements by the seller made upon the completion serving the purpose of bringing out the information which buyer must be aware of in regard to the shares and companies involved.
  • Any incorrect information furnished may land the parties in the court, thus proper care must be taken.
  • 8. RESTRICTIVE COVENANTS- It may include: a nonsolicitation clause, prohibiting the seller from soliciting the buyer’s suppliers/ customer & a non-competitive clause restricting the seller in establishing or engaging in a business which may compete with the buyer; for a set period of time as settled.
  • These are particularly of utmost importance to the buyer since the seller can considerably hamper the business with the knowledge acquired of the market. The buyer must take adequate measures to significantly protect himself from any actions of the seller that that may impair business.
  • The time mentioned for the restraint must be reasonable for both the parties as per the nature of interest involved.
  • 9. It may set forth the conditions to be fulfilled by both the parties before the execution of the agreement is made. These shall be covered by conditions PRECEDENT. These may be in form of obligations of the parties, authorizations, permits or permissions to be obtained by the respective parties.
  • 10. CONDITIONS SUBSEQUENT: The agreement also safeguards the parties the future defaults, if made by either. That is if the parties fail to abide by the terms set forth in the agreement, the other party shall have a mechanism to turn to and get the terms enforced.