Share Purchase Agreement
A Share Purchase Agreement is a legal contract for the sale and purchase of existing shares in a company between a seller and buyer. It details the terms, conditions, and warranties of the share transfer.
- 01Agreement Basics
- 02Company Information
- 03Investor/Purchaser Information
- 04Share Details
- 05Purchase Price & Valuation
- 06Payment Terms
- 07Capitalization
- 08Financial Information
- 09Completion Details
- 10Pre-Completion Covenants
- 11Post-Completion Obligations
- 12Transfer Rights (ROFR/Tag-Along/Drag-Along)
- 13Non-Compete & Non-Solicitation
- 14Indemnification
- 15Dispute Resolution
- 16Confidentiality
- 17Termination
- 18Notices
- 19Miscellaneous Provisions
- 20Schedules & Disclosures
- 21Signatures
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About this document
What it is for, what UAE law expects and when to ask a lawyer instead.
What is a Share Purchase Agreement (SPA)?
A Share Purchase Agreement (SPA) is the definitive contract used when a buyer purchases existing shares from a seller (an existing shareholder).
This is different from a "Share Subscription Agreement," which is used when the company issues new shares. In an SPA, the money typically goes to the selling shareholder, not the company.
The "Gold Standard" for Exits
Whether you are buying out a co-founder or acquiring a company, the SPA is the critical document that transfers legal title of the shares.
In the UAE, this document is often required to be notarized (for mainland LLCs) or presented to the Free Zone registrar to update the company's license and share register.
What Crucial Information Does It Cover?
A robust SPA protects the buyer against hidden liabilities:
1. Representations & Warranties
The seller guarantees broadly that the company has no hidden debts, lawsuits, or tax issues.
2. Indemnity
A promise by the seller to reimburse the buyer if any pre-sale liabilities (like an old fine) pop up later.
3. Conditions Precedent
Events that must happen before the deal closes, such as getting government approval or bank consent.
4. Non-Compete
Prevents the seller from immediately starting a rival business and taking all the customers.
Risks of Non-Compliance
Hidden Debts
Without warranties, you buy the company "as is"—debts, lawsuits, and all.
Title Fraud
Ensures the seller actually owns the shares and hasn't pledged them as security to a bank.
Employee Flight
Sellers might poach key employees after selling. Non-solicitation clauses prevent this.
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