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Share Purchase Agreement

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A share purchase agreement is a document in which parties and their corporate lawyers set out the terms and conditions of the sale and purchase of shares in a company. It is usually the final contract in an acquisition process and it binds parties to actually proceed with the sale. It is also referred to as stock purchase agreement or its abbreviation SPA.

Acquisition process in the Netherlands

A share purchase agreement often concludes a (long) period of negotiations between parties and their lawyers. Therefor an SPA may be preceded by other legal documents such a Letter of Intent and a Due Diligence. Important difference is that these documents do not yet fully bind parties. They are however instrumental in drafting the share purchase agreement.

Key elements share purchase agreement

In a share purchase agreement parties set out which shares are to be sold, the price thereof and the date / timeline of completion. It will naturally also contain detailed information about the parties.

Payment conditions and escrow

A share purchase agreement under Dutch law may also cover specific conditions relating to the payment, e.g. a payment schedule, possibility to retain a part of the purchase price (escrow). Furthermore matters such as the change of boards directors can be part of a share purchase agreement.

Warranties and representations

In The Netherlands, the share purchase agreement is executed when the shares are transferred to the buyer. Hereafter the seller is not connected to the company anymore. In order to protect the buyer, an SPA will always include a variety of warranties and representations. Both from the selling as buying party (although those from the seller are most relevant). The -often extensive- warranties are crucial for future liabilities and cause most debat between the parties’ lawyers.

Asset purchase agreement

With a share purchase agreement the ownership of the company in total (including all assets and liability) changes from seller to buyer. All contractual relationships with the company remain unchanged. Control of the company is transferred. Another way to acquire a business is via an asset purchase agreement. Only assets included in the agreement will be transferred to the buyer but everything else stays with the seller.


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