A share purchase agreement (SPA) is the contract that governs the sale of shares in a company from a seller to a buyer, setting price, warranties, and conditions.
A share purchase agreement (SPA) is the legally binding contract that governs the sale of shares in a company from existing shareholders to a buyer. It sets the price, the number of shares, the warranties given by the seller, and the conditions that must be met before the deal closes.
Quick answer: a share purchase agreement transfers ownership of a company by transferring its shares, rather than its individual assets.
In a share purchase, the buyer acquires the company itself, including its assets, liabilities, and contracts. In an asset purchase, the buyer selects specific assets and usually leaves liabilities behind. The choice has significant tax and risk consequences, which is why both sides take an SPA seriously.
A share purchase agreement is a specialized, high-stakes member of the purchase agreement family and one of many types of contracts. Because an SPA carries dense defined terms, schedules, and cross-references, it is a prime example of why contracts are better managed as connected data than as flat files, so that a change to one defined term flows through every reference. See why defined terms break at scale.
What is a share purchase agreement?
It is the contract that transfers ownership of shares in a company from the seller to the buyer, setting the price, warranties, and conditions of the sale.
What is the difference between a share purchase and a stock purchase agreement?
They are the same concept. Share purchase agreement is common in the UK and many other markets, while stock purchase agreement is the typical term in the United States.
Is a share purchase agreement legally binding?
Yes. Once signed and its conditions are met, an SPA is a binding contract that completes the transfer of share ownership.