Share Sale Agreements

Buying or selling the shares in a private company, with the warranties, indemnities and due diligence that a share sale depends on.

  • Acting for the buyer or the seller
  • Share sale agreements prepared, reviewed and negotiated
  • Due diligence scoped to the size of the company
  • Change of control issues checked before completion
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2020Established

Shares or assets

Buying the Company, Not Just the Business

In a share sale the company itself changes hands. Everything it has done before completion comes with it.

In a business sale, the buyer acquires listed assets and leaves the rest behind with the seller. In a share sale, the buyer acquires the company, so its contracts, employees, tax history and any undisclosed liabilities remain inside the company after completion.

That is why the protection in a share sale sits in 2 places: the due diligence the buyer carries out before signing, and the warranties and indemnities the seller gives in the agreement. For a seller, the task is to limit those warranties to what can properly be given and to disclose known issues against them.

This page is general information and is not legal advice about your circumstances.
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What we handle

What We Handle on a Share Sale

The work is scoped at the start so that the due diligence matches the size and history of the company.

The Share Sale Agreement

Price and adjustments, conditions, completion mechanics, and the transfer of the shares and company records.

Warranties and Indemnities

The promises the seller makes about the company, and the limits on claims such as caps, time limits and thresholds.

Due Diligence

A review of the company’s constitution, registers, key contracts, leases, employees and claims, scoped to your needs.

Change of Control

Checking leases, finance and supplier contracts for clauses triggered when ownership of the company changes.

Directors and Officers

Resignations and appointments at completion, and releases of personal guarantees given by the outgoing owners.

Restraints and Handover

Restraints on the outgoing owners and any consultancy or handover period after completion.

Fixed fees for this work are published on our pricing page.

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How it works

How a Share Sale Proceeds

01

Scoping

We confirm who we act for, the price structure and the level of due diligence needed, then quote a fixed fee.

02

Due diligence

For a buyer, we review the company records and contracts and report on the issues found.

03

The agreement

We prepare or review the share sale agreement and negotiate the warranties, indemnities and conditions.

04

Completion

The shares are transferred, the registers and ASIC records are updated, and the outgoing directors are replaced.

Before you start

What to Have Ready

A share sale moves faster when the company’s records are gathered early. For a seller, this also reduces the scope for warranty claims later.

Company records: The constitution, share register, members and directors registers, ASIC extract and any shareholders agreement.

Financial position: Recent financial statements, tax returns, loans to and from shareholders, and any guarantees the company has given.

Key contracts: Leases, finance facilities, supplier and customer agreements, licences and any contracts that could be affected by a change of ownership.

People and claims: Employee arrangements and entitlements, contractor agreements, and any current or threatened claims, complaints or regulatory matters.

Common Mistakes

Treating it like a business sale: Assuming the buyer can pick which liabilities to take on. In a share sale, everything stays with the company unless the agreement deals with it.

Skipping due diligence to save cost: Warranties are only useful if the seller can pay a claim. Due diligence finds the problems before the price is paid.

Overlooking related-party loans: Loans between the company and its outgoing owners should be repaid, forgiven or documented at completion, and your accountant should check the tax consequences.

Leaving guarantees in place: An outgoing owner who stays personally liable under the company’s lease or finance remains exposed after they have sold.

Points Worth Knowing

Liabilities stay with the company

A buyer takes on the company’s past, which is why due diligence and warranties matter more than in an asset sale.

Disclosure protects the seller

Known issues disclosed against the warranties generally cannot later support a warranty claim.

Consents may still be needed

Although the company is not changing, landlords, lenders and key suppliers may have consent rights on a change of control.

Personal guarantees

Guarantees given by the outgoing owners for the company’s lease or finance should be released at completion.

Employees remain employed

Staff stay employed by the company, together with their accrued entitlements.

Stamp duty

Duty may apply to a share transfer, particularly where the company holds land, so this is checked early.

Tax outcomes on a share sale differ from an asset sale. Your accountant should advise on the tax position before the price and structure are settled.

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Explore:

Some owners sell the business out of the company instead of selling the shares.

Related: Business Sales and Purchases · Corporate and Commercial Law · Company, Trust and Structuring · Pricing
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Share Sale FAQs

Should I buy the shares or the business?
It depends on the business, the tax position of both parties and whether contracts, licences and leases can be transferred. An asset purchase lets a buyer leave unwanted liabilities behind, while a share purchase keeps contracts and licences in place without transferring them. Your accountant should advise on the tax side, and we can advise on the legal differences.
What does due diligence involve?
For a small private company it usually covers the constitution, share and member registers, ASIC records, material contracts, leases, finance, employees, licences and any claims. The scope is agreed at the start and quoted separately from the agreement.
What is a warranty in a share sale agreement?
A warranty is a statement by the seller about the company, such as that its accounts are accurate or that there are no undisclosed claims. If a warranty is untrue, the buyer may claim compensation, subject to the limits agreed in the contract.
How much does a share sale cost?
Our share sale fee is published as a starting price on our pricing page. Due diligence is quoted separately once we know the size of the company and how long it has been trading.
Do you act in disputes after completion?
No. We act on the transaction itself. If a claim under the agreement arises after completion, you will need a lawyer who acts in commercial disputes.
How long does a share sale take?
A straightforward sale of a small private company can complete within a few weeks once terms are agreed. Due diligence, third-party consents and finance approval are what usually determine the timetable.
Is there stamp duty on a share sale?
It depends on the state and on what the company owns. In some cases, particularly where the company holds land, duty can apply to the transfer of shares. This is checked at the start so that it can be factored into the price.

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Buying or Selling Shares?

Tell us about the company and the deal, and we will scope the work and confirm a fixed fee before starting.

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