Share Purchase Agreement (SPA) – A Complete Guide

This article was last reviewed and approved on June 2026 by Rachel Duncan, Legal Director, who has more than 25 years’ experience advising businesses on legal matters. It is intended as general guidance only and should not be relied on as a substitute for legal or tax advice on a specific share purchase.

If you are planning to buy or sell shares, a correctly drafted share purchase agreement (SPA) is essential. An SPA is a legally binding contract that records the parties, the shares being sold, the price, completion process, warranties, disclosures and any conditions to completion.

In a UK private company share sale, completion will usually also require a properly executed stock transfer form, payment of any Stamp Duty where applicable, and registration of the buyer in the company’s register of members. HMRC guidance states that Stamp Duty on shares is generally 0.5%, and Stamp Duty is payable on stock transfer form purchases where the transaction is over £1,000.

Government Guidance on Tax When You Buy Shares

This guide sets out the main elements of a share purchase agreement and explains why accurate information is important to both buyers and the sellers.

Although this article provides an overview of the main issues commonly covered in an SPA, it is not a template agreement, and we'd advise strongly against the use of templates. The exact drafting for any business will depend on the company, the share structure, the price mechanism, any warranties or indemnities, and the approvals needed before completion, meaning a template is often far too general to be of any real substance.

That makes it important to decide who drafts the share purchase agreement. Generally, it’s the buyer in conjunction with a solicitor who draws up the agreement because it’s the buyer who is taking the greatest risk.

Buying or selling shares? Get the agreement checked before you commit.
Whether you are buying into a company, selling your shares, or transferring ownership as part of a wider business sale, the SPA needs to protect your position. Our legal team can review, draft or negotiate the agreement and flag issues before they become expensive.

I’m buying shares — get help with due diligence, warranties, indemnities and completion documents.
I’m selling shares — get help limiting your liability, preparing disclosures and completing the transfer properly.

Speak to a business solicitor.

What is a Share Purchase Agreement (SPA)?

Before getting into detail, it’s important to understand what a share purchase agreement is and how it differs from other types of commercial agreement.

A Share Purchase Agreement is a legally binding document that governs the sale and transfer of shares in a company. Unlike an asset purchase agreement, which transfers selected assets and liabilities, an SPA transfers ownership of shares specifically. Depending on the percentage and class of shares being acquired, that may give the buyer minority rights, significant influence, or effective control of the company.

When a buyer purchases shares in a business, their aim is to gain partial or total control of the business. In that sense, an SPA is different from an agreement to purchase assets such as equipment, stock or property. An asset purchase does not transfer ownership of the company itself. However, if a buyer acquires the trading assets, goodwill, contracts and employees needed to operate the business, it may obtain practical control of the business operations without acquiring the company’s shares.

The purpose of an SPA is to set out the scope and terms of the agreement, together with any necessary supporting information, to ensure that both parties understand their rights and liabilities resulting from a transfer of shares.

Common ways we help with SPAs

SPA review
 You already have a draft and want to know whether it protects you.

SPA drafting
 You are buying or selling shares and need the agreement prepared from scratch.

SPA negotiation support
 You need help responding to warranties, indemnities, disclosures or completion conditions.

Due diligence support
 You are buying shares and want the financial, tax and legal risks reviewed together.

Key Components of a Share Purchase Agreement

A well-structured Share Purchase Agreement includes a number of essential elements, including:

• Definitions

• The parties to the agreement

• Information on the company selling shares

• Purchase price of the shares

• Title

• Timetable for completion

• Warranties

• Restrictions following completion

• Confidentiality requirements

1. Definitions

SPAs contain many terms that have legal implications, so it is useful to include a ‘term sheet’ at the beginning of the document covering any legal terms that are possibly ambiguous, together with their definition.

This is a useful reference source that ensures both parties have a clear understanding of the terms and helps avoid any misunderstandings or future disputes.

2. Parties to the agreement

In the simplest share purchase agreement (SPA), there are two parties – the buyer and the seller or sellers if the company is owned by a number of shareholders.

Depending on the transaction, other parties may also need to be involved, such as guarantors, trustees, corporate sellers, option holders, holders of security over the shares, or group companies giving covenants. Banks, landlords or key customers may not usually be parties to the SPA, but their consent may be needed if loan agreements, leases or commercial contracts contain change-of-control restrictions.

All parties must provide their addresses and registered offices, together with a declaration that they have the right to sell or buy the shares.

The SPA should state whether each seller’s liability is several, joint, or joint and several, and whether any caps, time limits or exclusions apply. This is especially important where there are multiple sellers, because the buyer will want clarity on who is responsible if a warranty claim or indemnity claim arises.

3. Information on the company whose shares are being sold

This section provides the buyer with detailed information on the target company whose shares are being sold. This could include information on:

• Company overview – principal activities and markets

• Share structure – share capital, classes of share and details of shareholders

• Company structure - organisation, subsidiaries, partnerships

• Management structure – directors, non-executive directors and senior managers

• Employees – number of employees, remuneration and pension structure

• Finance – bankers, loans, mortgages, debts and other commitments

• Accounts – recent statutory and management accounts, with financial projections

• Taxation – Corporation Tax, PAYE, VAT , employment taxes, stamp taxes and any known, accrued, contingent or disputed tax liabilities

• Litigation - any existing, pending or recent litigation

• Property – property owned or leased, planning permissions or restrictions

• Intellectual property – trademarks, brand names, patents, copyright material and other intellectual property

Related: Sole trader or limited company: Which is best for you?

4. Purchase Price of the Shares

This section provides the buyer with information on the number and class of shares available for purchase together with the seller’s indication of the price per share. It should also include information on the method and currency of payment, together with the timescale for settlement.

The seller may provide an initial price per share, but price and timescale for settlement may vary if the transaction is based on performance. In that case, payment will be made in stages and the price will be based on the seller’s performance against agreed targets.

5. Title and Ownership

In this section, the parties agree that the seller will sell the shares and the buyer will purchase them at the agreed price and timescale.

The seller should confirm that they have legal and beneficial title to the shares, have authority to sell them, and that the shares are free from charges, options, liens or other third-party rights except as disclosed. The SPA should also deal with any restrictions in the company’s articles of association or shareholders’ agreement, including any requirement for board approval or existing shareholder consent.

This means that, following completion, the buyer becomes the owner of the shares and has the right to dispose of them.

6. Timetable for Completion

In a straightforward transaction, exchange and completion may happen on the same day. In more complex deals, exchange may take place first, with completion delayed until agreed conditions have been satisfied. These conditions may include shareholder consent, board approval, lender consent, regulatory approval, tax clearances or delivery of agreed completion documents.

However, delays to completion may occur if either party has to meet certain obligations, such as:

• Consent of other shareholders to the transaction

• Competition law should also be considered where the buyer and target operate in the same or closely related markets. Most SME share sales will not need CMA approval, but larger or strategically important transactions may be reviewed if they meet the UK merger control tests. These include tests based on the target’s UK turnover, the parties’ combined share of supply, or the buyer’s existing UK market position. The SPA should make clear whether any competition clearance is needed before completion.

• Approval of regulatory authorities if the buyer is entering a regulated sector, such as financial services

If conditions like this are in place, it’s essential to agree a provisional schedule and cut-off date for completion as well as the mechanism for proving that the conditions have been met.

Stock transfer form, Stamp Duty and company registers

In a UK private company share sale, the SPA is only one part of the completion process. The parties will usually also need a stock transfer form, share certificates or indemnities for lost certificates, board approval where required by the articles, payment of any Stamp Duty, and updates to the company’s register of members. HMRC says stock transfer forms and Stamp Duty payments must be sent within 30 days of the form being signed and dated.

Companies should also consider whether the transaction changes the company’s PSC position or shareholder information. Companies House guidance says companies must identify PSCs, provide PSC information to Companies House within 14 days, and update it within 14 days of confirming a change. A PSC includes someone who holds more than 25% of the shares or voting rights, or has the right to appoint or remove a majority of the board.

7. Warranties

The purpose of warranties in a share purchase agreement is to protect the buyer against the risk of unexpected problems or liabilities following completion. For example, there may be upcoming litigation, an undisclosed tax liability or recent loss of a major customer which could impact the buyer’s liabilities as well as the value of the shares.

Although it is the buyer’s responsibility to be sure that the company’s affairs are in order before proceeding, the seller must make warranties about the accuracy of statements about the company’s affairs, its assets and its financial position.

If the warranties turn out to be untrue, the buyer can then make a claim for breach of contract and may recover some of the lost value.

If a seller fairly discloses a matter against the warranties, the buyer may be prevented from bringing a warranty claim for that matter, depending on the wording of the SPA and disclosure letter. The buyer may instead seek a price adjustment, a specific indemnity, retention, escrow arrangement or condition to completion to reflect the identified risk.

8. Post-Completion Restrictions

When a buyer has acquired shares in a company, they must be confident that the seller will not take any actions to damage the ‘new business.’ For example, the seller could set up another business to compete with the buyer, or approach former customers and suppliers to strengthen their new competing venture.

The share purchase agreement should therefore include restrictive covenants to cover this type of risk and both parties should agree to the restrictions. However, restrictive covenants must be carefully drafted so they go no further than reasonably necessary to protect legitimate business interests, such as goodwill, confidential information, customer relationships or workforce stability. Overly broad restrictions may be unenforceable.

9. Confidentiality Clause

The share purchase agreement should establish the guidelines for confidentiality about the transaction. This covers the disclosure and protection of confidential or commercial information between the parties as well as the risk of ‘leaks’ to third parties. This is to ensure that neither of the parties or any of their competitors can take unfair advantage of the situation while the transaction is taking place.

The agreement should also stipulate when an announcement of the changes can be made. If the transaction involves different share classes, alphabet Shares or changes to shareholder rights, take advice before agreeing the SPA. These issues can affect voting rights, dividend rights, tax treatment and Companies House filings.

Due Diligence in a Share Purchase Agreement

As this outline of the SPA process indicates, the buyer must take many different factors into consideration before proceeding with a purchase. That means, they should carefully examine and evaluate all information and documentation provided by the seller, a process known as due diligence.

The due diligence process can be time-consuming for both parties, but it must be rigorous and should not be rushed. A careful due diligence reduces the buyer’s exposure to risk and unforeseen liabilities and forms the basis of a successful share transfer.

How Accounts & Legal Can Help

Preparing and completing a share purchase agreement and carrying out due diligence requires an understanding of company law as well as experience of the process of share transactions.

Here at Accounts & Legal, our experienced small business solicitors and lawyers can provide expert advice and guidance, as well as preparing the SPA for either buyers or sellers.

For more information, please contact us on 0207 043 4000 or info@accountsandlegal.co.uk.

In our Guide to Shares and Shareholders, we dive into some of the issues mentioned in this article in more detail.