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What is Share Purchase Agreement?

The Share Purchase Agreement is an agreement which finalizes all terms and conditions related to the purchase and sale of the shares of a company. It are an agreement between parties where the seller agrees to sell the stated number of shares to the buyer at a particular price. The main aim of this document is to prove that the terms of the agreement were mutually agreed between the parties.

SPA specifies the consideration and the number of shares to be sold, with the conditions precedent and covenants by the parties. On the basis of this agreement, shares will be allotted.

SPA covers the following aspects such as providing the definition of all the major terms used in the agreement. It provides that all the statements that the seller & buyer are signing off to be true. It also provides dispute resolution mechanism. It will also specify any special tax treatment that either the seller or the buyer may be entitled to.

Benefits of Share Purchase Agreement

Here are the following benefits of share purchase agreement

  • In the absence of SPA, there can be several undesirable consequences. While many businesses take a casual approach to such matters.
  • With the help of this document, it provides an opportunity to protect the interest of parties before the shares are transferred. It covers every aspect of the transaction and it is important for both the parties to examine each clause covered in the document and understand its meaning.
  • With the help of this document, it provides an opportunity to protect the interest of parties before the shares are transferred. It covers every aspect of the transaction and it is important for both the parties to examine each clause covered in the document and understand its meaning.

Frequently Asked Questions


A Share Purchase Agreement or SPA is an agreement which finalizes all the terms and conditions related to the purchase and sale of the shares of a company.

A Share Purchase Agreement includes both share and its Price.

The Elements of a Share Purchase Agreement are Name of the Company, Name of the Purchaser, Value Per Share, Warranties and Representations, Number of Shares sold, Agreement of Indemnification, and Place of Transaction.

A Share Purchase Agreement or SPA is used when an individual or an entity decides to sell the shares in the company with some other person or entity.

Yes, Share Purchase Agreement is a legally binding agreement.

Yes, a Share Purchase Agreement can act as Evidence in the eyes of the Law.

The Dispute Resolution Form is annexed as a prefix in a Share Purchase Agreement.

The Clauses of a Share Purchase Agreement are Parties, Recitals, Definitions and Interpretations, Consideration for Sale of Shares, Condition Precedent, Closing Clause, Covenant by Parties, Conditions Subsequent, Representations and Warranties by Seller, Representation and Warranties by Buyer, Confidentiality, Indemnification, Notice, Force Majeure, Resolution of Dispute and Arbitration, Jurisdiction, Termination.

The common mistakes while drafting a Share Purchase Agreement are Considering any Template, Executing the agreement without any prior knowledge and experience, Not Consulting any Legal Expert, and Not knowing the Tax Implications.

Yes, a Share Purchase Agreement assists in increasing the revenue of a company.

Normally, a period of 3 to 4 days is required to draft a Share Purchase Agreement.

The term “Force Majeure” denotes a clause that acts as a resort in the situation of unforeseen crises and strengthens the parties involved in the share purchase agreement.

The jurisdiction of the Share Purchase Agreement will be based on Indian Laws.

The clause representations and warranties of seller include Number of Shares owned, List of the Directors, Transparency of Accounts, Pending Disputes, Loan Details.

The term “Recitals” means the factual background, consideration, objectives, roles of the parties involved.

The term Consideration for Sale of Shares means the Payment Structure involved in the transaction.

No, there is no need to physically present for the drafting of a Share Purchase Agreement, our experts will assist you with the process of drafting.

The main benefit of a Share Purchase Agreement is to reduce the chances of confusion and makes the transaction unambiguous.

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