What is a Share Purchase Agreement?
A Share Purchase Agreement (SPA) is a legally binding contract under which a buyer acquires a company by purchasing its shares from the existing shareholders, rather than acquiring the company’s individual assets. Once the sale completes, the company itself continues exactly as it was, same legal entity, same contracts, same employees, same liabilities, only the ownership of its shares has changed hands. This is the key structural difference from an Asset Purchase Agreement, where the buyer selects specific assets and liabilities rather than acquiring the whole company as a going concern.
Share purchases are used across a wide range of transactions: a founder or founding team selling their company outright, a private equity or strategic buyer acquiring a controlling stake, one shareholder buying out another, or an acquirer taking over a listed company through the market. What all of these share is the need for a single document that defines exactly what is being bought, what the seller is promising about the state of the company, and what protection the buyer has if the company turns out to be different from what was represented, since the buyer is inheriting everything the company owns and owes.
No spam · We send one copy of your document · Reviewed by My Legal Pal lawyers Free · Optional fields can be left blank · Email required to download This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This field is required. This template is a general starting point for reference purposes only. It is not legal advice, and a share purchase of any material value should always be reviewed by a qualified lawyer before signing, particularly given the tax, regulatory, and warranty implications covered in our complete guide. Fields marked in double curly brackets need to be completed for your specific agreement. This Share Purchase Agreement ("Agreement") is made and entered into as of [ EFFECTIVE DATE ] ("Effective Date"), by and between: [ SELLER NAME ] (and, if more than one seller, each a "Seller" and collectively the "Sellers"), holder(s) of the Shares described below; and [ BUYER NAME ], a [ BUYER ENTITY TYPE ] organised under the laws of [ BUYER JURISDICTION ], with its principal place of business at [ BUYER ADDRESS ] ("Buyer"). (Seller(s) and Buyer are each referred to individually as a "Party" and collectively as the "Parties." The company whose shares are being sold is referred to as the "Company.") WHEREAS, Seller(s) own [ NUMBER OF SHARES ] shares of [ SHARE CLASS ] in [ COMPANY NAME ] ("Company"), a [ COMPANY ENTITY TYPE ] organised under the laws of [ COMPANY JURISDICTION ], representing [ OWNERSHIP PERCENTAGE ]% of the Company's total issued and outstanding share capital ("Shares"); WHEREAS, Seller(s) wish to sell, and Buyer wishes to purchase, the Shares on the terms set out below; NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, the Parties agree as follows: "Shares" means the shares described in the Recitals and Schedule A. "Closing" means the completion of the sale and purchase of the Shares as described in Clause 4. "Disclosure Letter" means the letter dated [ DISCLOSURE LETTER DATE ] delivered by Seller(s) to Buyer, disclosing exceptions to the Warranties. "Warranties" means the representations and warranties given by Seller(s) under Clause 6 and Schedule B. [ ADDITIONAL DEFINED TERMS ] Subject to the terms and conditions of this Agreement, at Closing, Seller(s) shall sell, transfer, and deliver to Buyer, and Buyer shall purchase and accept from Seller(s), full legal and beneficial title to the Shares, free and clear of all liens, encumbrances, and third-party claims, together with all rights attached to them as of the Effective Date. The total purchase price for the Shares shall be [ TOTAL PURCHASE PRICE ] ("Purchase Price"), payable as follows: [ PAYMENT TERMS ] (e.g., lump sum at Closing / instalments / escrow arrangement, specify schedule). [ PRICE ADJUSTMENT MECHANISM ] (specify any working capital, net debt, or other adjustment mechanism applying between signing and Closing, if applicable). Closing shall be conditional upon satisfaction (or waiver by Buyer) of the following conditions: [ CONDITIONS PRECEDENT ] (e.g., receipt of required regulatory or competition authority approvals, third-party consents to change of control provisions in material contracts, accuracy of the Warranties as of Closing). Closing shall take place on [ CLOSING DATE ], or such other date as the Parties may agree in writing, at [ CLOSING LOCATION ] or remotely by exchange of documents. At Closing, Seller(s) shall deliver: duly executed share transfer forms and original share certificates (or, for dematerialised shares, appropriate electronic transfer instructions); board resolutions of the Company approving the transfer and, where applicable, the resignation and appointment of directors; and [ ADDITIONAL CLOSING DELIVERABLES ]. Between the Effective Date and Closing, Seller(s) shall procure that the Company carries on its business in the ordinary course consistent with past practice, and shall not, without Buyer's prior written consent, [ PRE CLOSING RESTRICTED ACTIONS ] (e.g., declare dividends, incur material debt, dispose of material assets, enter into contracts outside the ordinary course). Seller(s) represent and warrant to Buyer, as of the Effective Date and as of Closing, subject to any exceptions set out in the Disclosure Letter, the matters set out in Schedule B, including without limitation: title to the Shares; the accuracy of the Company's financial statements; the absence of undisclosed liabilities; compliance with applicable law, including tax and employment law; the absence of pending or threatened litigation; and the status of material contracts and intellectual property. The Warranties are given subject to matters fairly disclosed in the Disclosure Letter, and Buyer shall have no claim in respect of any matter fairly disclosed. Buyer represents and warrants to Seller(s) that: (a) Buyer has full power and authority to enter into and perform this Agreement; (b) this Agreement constitutes a valid and binding obligation of Buyer, enforceable in accordance with its terms; and (c) [ ADDITIONAL BUYER REPRESENTATIONS ]. Seller(s) shall indemnify, defend, and hold harmless Buyer against any losses, damages, liabilities, and reasonable costs, including legal fees, arising out of: (a) any breach of the Warranties; (b) any breach of Seller(s)' covenants under this Agreement; or (c) [ ADDITIONAL SELLER INDEMNITY SCOPE ]. The maximum aggregate liability of Seller(s) for claims under the Warranties and this indemnity shall not exceed [ LIABILITY CAP ], except in respect of [ LIABILITY CAP EXCLUSIONS ] (e.g., the title Warranty, fraud, or wilful misconduct, which are commonly excluded from the general cap). No claim may be brought unless notified to Seller(s) within [ WARRANTY CLAIM PERIOD ] of Closing, except for tax-related Warranty claims, which shall survive for [ TAX WARRANTY SURVIVAL PERIOD ]. No individual claim below [ DE MINIMIS THRESHOLD ], and no claims in aggregate below [ AGGREGATE THRESHOLD ], may be brought against Seller(s) under this Clause. For a period of [ NON COMPETE DURATION ] following Closing, Seller(s) shall not, directly or indirectly, engage in [ NON COMPETE RESTRICTED ACTIVITY ] within [ NON COMPETE GEOGRAPHIC SCOPE ]. For the same period, Seller(s) shall not solicit for employment any employee of the Company, nor solicit any customer or supplier of the Company to cease or reduce its business relationship with the Company. Each Party shall keep confidential all non-public information disclosed by the other Party in connection with this transaction, both before and after Closing, for a period of [ CONFIDENTIALITY PERIOD ], except where disclosure is required by law or regulatory authority. [ TAX ALLOCATION TERMS ] (specify any agreed tax treatment, cooperation on filings, tax indemnity or covenant provisions, and, where applicable, compliance with the fair value rules and other jurisdiction-specific tax requirements applying to the transfer). The Parties acknowledge that this transaction may be subject to notification or approval requirements under applicable competition, antitrust, securities, or takeover regulations in the jurisdictions where the Company operates or is listed. Each Party shall cooperate in good faith to complete any required filings or approvals prior to Closing, and neither Party shall take any action that would cause the other to be in breach of such requirements. [ POST CLOSING OBLIGATIONS ] (specify any transitional support, handover of records, or continuing obligations of Seller(s) after Closing). Neither Party may assign or transfer its rights or obligations under this Agreement without the prior written consent of the other Party, except [ ASSIGNMENT EXCEPTIONS ] (e.g., to an affiliate, or in connection with a subsequent sale of substantially all of the acquiring Party's assets). Any dispute arising out of or relating to this Agreement shall be resolved by [ DISPUTE RESOLUTION MECHANISM ] (e.g., arbitration under [institution] rules, seated in [city], or litigation in the courts of [ JURISDICTION FOR DISPUTES ]). This Agreement shall be governed by and construed in accordance with the laws of [ GOVERNING LAW ]. Any notice required under this Agreement shall be in writing and delivered to the addresses set out at the head of this Agreement, or such other address as either Party may notify in writing, and shall be deemed received [ NOTICE DEEMED RECEIPT TERMS ]. If any provision of this Agreement is held invalid or unenforceable, the remaining provisions shall continue in full force and effect, and the Parties shall negotiate in good faith to replace the invalid provision with one that achieves the original intent as closely as possible. This Agreement, together with its Schedules and the Disclosure Letter, constitutes the entire agreement between the Parties regarding the transaction and supersedes all prior discussions, negotiations, and understandings, whether written or oral. This Agreement may only be amended by written instrument signed by both Parties. This Agreement may be executed in counterparts, including by electronic signature, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date first written above. Seller(s) warrant that, except as fairly disclosed in the Disclosure Letter: [ DISCLOSURE LETTER ITEMS ] (list, or reference the attached Disclosure Letter for, specific exceptions to the Warranties in Schedule B) This template is provided by My Legal Pal for general reference purposes only and does not constitute legal advice. Share purchases involving significant value, cross-border parties, or a listed Indian target subject to the SEBI Takeover Code, should be reviewed and customised by a qualified lawyer before execution, given the warranty, tax, and regulatory implications involved. Need this tailored to your specific deal? Get Your Share Purchase Agreement Drafted at MyLegalPal.com, or read our complete guide to Share Purchase Agreements for an explanation of every clause above, including India's Section 50CA and SEBI takeover code rules. This document is generated for informational purposes only and does not constitute legal advice. My Legal Pal recommends all agreements be reviewed by a qualified lawyer before signing.
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Share Purchase Agreement
Share Purchase Agreement
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Share Purchase Agreement Template (Free Download)
SHARE PURCHASE AGREEMENT
Recitals
1. Definitions
2. Sale and Purchase of Shares
3. Purchase Price and Payment
4. Conditions Precedent and Closing
5. Pre-Closing Covenants
6. Representations and Warranties of Seller(s)
7. Representations and Warranties of Buyer
8. Indemnification
9. Restrictive Covenants
10. Confidentiality
11. Tax Matters
12. Regulatory Compliance
13. Post-Closing Obligations
14. Assignment
15. Dispute Resolution
16. Governing Law
17. Notices
18. Severability
19. Entire Agreement and Amendment
20. Counterparts
For/By [ SELLER NAME ]
Signature: ________________________
Name: [ SELLER SIGNATORY NAME ]
Date: ________________________For [ BUYER NAME ]
Signature: ________________________
Name: [ BUYER SIGNATORY NAME ]
Title: [ BUYER SIGNATORY TITLE ]
Date: ________________________
Schedule A: Shares Being Sold
Seller Number of Shares Class Percentage of Total Issued Share Capital [ SELLER 1 NAME ] [ SELLER 1 SHARE COUNT ] [ SELLER 1 SHARE CLASS ] [ SELLER 1 PERCENTAGE ]% [ SELLER 2 NAME ] [ SELLER 2 SHARE COUNT ] [ SELLER 2 SHARE CLASS ] [ SELLER 2 PERCENTAGE ]% Schedule B: Warranties
Schedule C: Disclosure Letter Summary
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Share purchase vs asset purchase: why the distinction matters
These are genuinely different instruments, and choosing between them is usually the first real decision in any acquisition. Our complete guide to Asset Purchase Agreements covers the reverse comparison in detail, but the core distinction is this:
What transfers. A share purchase transfers the entire company, including every asset and liability, known and unknown. An asset purchase transfers only the specific assets named in the agreement, leaving the rest with the seller’s continuing entity.
Liability exposure. Because a share purchase means acquiring the company as-is, the buyer inherits every liability the company carries, whether disclosed during due diligence or not. This is precisely why a share purchase agreement typically carries far more extensive representations, warranties, and indemnification provisions than an asset purchase agreement does. Our guide on the contract clauses that quietly slash valuation during due diligence covers exactly what a buyer’s legal team is looking for, and pricing in, when they review a target company’s contracts.
Contracts and licences. In a share purchase, the company’s existing contracts, leases, and licences generally stay in place automatically, since the contracting entity itself has not changed. The one real exception is where a contract contains a change of control clause, which can still be triggered by a share sale even though the legal entity is unchanged.
Employees. Employment continues without a break in a share purchase, since the employing entity has not changed. Our guide on employment contracts in India covers what happens to compensation and compliance obligations after the acquisition closes.
Governance after closing. Once the shares change hands, the buyer typically needs a governance framework for the company going forward, particularly where existing shareholders remain, or new co-investors are brought in alongside the buyer. Our guides on drafting a shareholders’ agreement effectively and, for an Indian private limited company specifically, structuring one that’s actually enforceable, cover exactly this next step.
Key clauses a Share Purchase Agreement should include
Shares being sold. A precise description of the shares, class, quantity, and percentage of the company’s total issued share capital being transferred.
Purchase price and adjustment mechanism. The total consideration, and, where relevant, how it is adjusted between signing and closing to reflect changes in the company’s working capital, net debt, or other agreed metrics. Getting this mechanism wrong is a genuinely common source of post-closing dispute.
Conditions precedent. The specific conditions that must be satisfied before closing actually occurs, regulatory approvals, third-party consents, and any other agreed pre-conditions.
Representations and warranties. Because the buyer is acquiring the entire company, this section is typically the longest and most heavily negotiated part of a share purchase agreement, covering the accuracy of financial statements, title to the shares and underlying assets, absence of undisclosed liabilities, litigation, tax compliance, employment matters, and material contracts. Our guide to what should be included in every business contract covers the underlying drafting discipline this section depends on.
Disclosure letter. A companion document in which the seller discloses specific exceptions to the warranties given. A warranty without a matching, carefully drafted disclosure letter can create liability for the seller over facts the buyer actually knew about before signing.
Indemnification. Which party bears financial responsibility if a warranty turns out to be false, and how that indemnity interacts with any liability cap. Our complete indemnity clause guide covers exactly how this allocation works in practice.
Limitation of liability. A cap on the seller’s maximum exposure under the warranties and indemnities, and whether certain categories, such as tax or title warranties, sit outside that cap. Our guide on why not having a limitation of liability clause can seriously damage a business covers why this distinction is worth real negotiating attention.
Restrictive covenants. Non-compete and non-solicitation obligations on the selling shareholders after closing, so the seller cannot simply start a competing business or poach the company’s customers and staff. Our guide on non-compete enforceability rules by state and country covers exactly how narrowly these need to be scoped to actually hold up.
Completion mechanics. What actually happens on closing, delivery of share certificates or electronic transfer instructions, board resolutions, resignation of outgoing directors, and release of any existing security over the shares.
Dispute resolution and governing law. How disputes between the parties get resolved, and which jurisdiction’s law governs the agreement, particularly important in cross-border acquisitions. Our guide on arbitration versus litigation in cross-border contracts covers this choice in depth, and our guide on breach of contract covers what happens if a warranty claim actually needs to be pursued after closing.
Merger control: the same regulatory step that applies to share deals
A sufficiently large share purchase can trigger a legal requirement to notify a competition or antitrust regulator before the deal closes, in exactly the same way an asset acquisition can, and the same thresholds generally apply regardless of which structure is used.
United States. Under the Hart-Scott-Rodino Antitrust Improvements Act, sufficiently large share acquisitions must be reported to the Federal Trade Commission and the Department of Justice before closing, with a mandatory waiting period observed. As of February 2026, the core size-of-transaction threshold is $133.9 million, adjusted annually. Our contract lawyers in the USA advise on structuring acquisitions against this regime.
United Kingdom. The Competition and Markets Authority can review a share acquisition where the target’s UK turnover exceeds a defined threshold, or where the transaction would result in a 25% or greater share of supply of particular goods or services in the UK. Our contract lawyers in London advise on UK-governed acquisitions.
European Union. The EU Merger Regulation requires notification to the European Commission where the combined worldwide turnover of the parties, and the EU-wide turnover of at least two of them, exceed defined thresholds.
India: two rules that make share purchases distinct from asset deals
A share purchase in India carries its own specific tax and regulatory framework, genuinely different from the slump sale rules that apply to an asset purchase, and a generic template will not address either of them.
Section 50CA: fair value for unquoted shares. Where shares of a private, unlisted company are transferred for less than their fair market value, as determined under Rule 11UA, the fair market value, not the actual price paid, is deemed to be the full consideration for computing the seller’s capital gains tax. This exists specifically to prevent undervaluation in private share transfers, and it cuts both ways: where the buyer pays less than fair market value, the shortfall, if it exceeds Rs 50,000, can separately be taxed as income in the buyer’s own hands under Section 56(2)(x). Stamp duty on the transfer is also typically calculated on whichever is higher, the actual consideration or the fair market value, so underpricing the shares on paper does not reduce the stamp duty exposure either. Getting the valuation methodology right before signing, not after, is genuinely important here, and it is exactly the kind of detail a generic template will not flag.
SEBI’s Takeover Code for listed companies. Where the target is a listed Indian company, acquiring 25% or more of its shares or voting rights triggers a mandatory open offer to public shareholders for a minimum of 26% of the company’s share capital, under the SEBI Substantial Acquisition of Shares and Takeovers Regulations. A second, separate trigger applies to existing shareholders: a creeping acquisition limit caps further purchases at 5% of the company’s shares within a single financial year, running April to March, not a calendar year, which is a common and costly trap for acquirers who assume the limit resets on 1 January. The SAST Amendment Regulations, 2025, which took effect in December 2025, now also require an independent registered valuer, appointed under Section 247 of the Companies Act, 2013, to determine the open offer price. Restructurings involving an overseas parent that indirectly holds shares in a listed Indian target can trigger these same obligations even where no Indian shares change hands directly, so this needs to be checked at the group level, not just the immediate transaction. Our company registration and compliance service can help structure and document an Indian share acquisition correctly against both of these frameworks from the outset.
Where this fits with your other business documents
A share purchase typically follows a due diligence process, so our guide on the specific clauses that quietly slash valuation during due diligence is worth reading before you finalise price and warranties. Once the shares change hands, the buyer usually needs a governance document for the company going forward, our guides on drafting a shareholders’ agreement, drag-along and tag-along rights, and the shareholders’ agreement drafting service cover exactly this next step. Where the sale involves a founder exiting the business entirely, our guide on what happens to equity when a co-founder leaves covers that adjacent question, and tracking the resulting ownership changes properly is covered in our cap tables and fully diluted ownership guide. Our broader business contracts guide covers the wider drafting discipline this agreement sits inside.
Frequently asked questions
What is the difference between a share purchase and an asset purchase?
In a share purchase, the buyer acquires the company itself by buying its shares, taking on every asset and liability the company carries, known and unknown, since the company continues exactly as it was, just under new ownership. In an asset purchase, the buyer acquires only specific, named assets and can choose which liabilities to assume, leaving the rest with the seller’s continuing entity.
What is Section 50CA and why does it matter for a share purchase in India?
Section 50CA of the Income Tax Act provides that where unquoted shares are sold for less than their fair market value, the fair market value, not the actual price, is treated as the full consideration for the seller’s capital gains tax. If the buyer pays below fair market value, that shortfall can also be separately taxed as income in the buyer’s hands under Section 56(2)(x), and stamp duty is typically calculated on the higher of the two figures as well.
When does buying shares in an Indian listed company trigger a mandatory open offer?
Acquiring 25% or more of a listed target’s shares or voting rights triggers a mandatory open offer to public shareholders for at least 26% of the company’s share capital under SEBI’s Takeover Code. A separate creeping acquisition limit caps further purchases by an existing holder at 5% within a single financial year, running April to March.
What is a disclosure letter and why does a share purchase agreement need one?
A disclosure letter is a companion document in which the seller lists specific exceptions to the warranties given in the agreement. Without it, a warranty can create liability for the seller even over facts the buyer already knew about before signing, since the warranty is read as an absolute statement unless it is expressly qualified by a matching disclosure.
Do existing contracts need to be renegotiated after a share purchase?
Generally not, since the contracting entity has not changed in a share purchase, unlike an asset purchase where contracts often need individual consent to assign. The one real exception is a change of control clause within an existing contract, which can still be triggered by a share sale even though the company itself remains the same legal entity.
Related reading for founders and dealmakers
Need a share purchase agreement drafted for your specific deal?
A template is a starting point, not a finished document. The clauses that actually protect you, warranties, the disclosure letter, indemnification, and, in India, the Section 50CA valuation and SEBI takeover code position, need to be tailored to your specific transaction and jurisdiction. My Legal Pal drafts and reviews share purchase agreements for businesses across India and internationally.
Get Your Share Purchase Agreement Drafted at MyLegalPal.com, or speak to our contract lawyers in India, the USA, or the UK about your specific deal. Our contract review service can also assess a share purchase agreement you’ve already been sent before you sign it. You can also download the free Share Purchase Agreement template as a starting point, and compare it against our Asset Purchase Agreement template if you’re still deciding which structure fits your deal.
