Share Purchase Agreement SPA

Take a Swedish software group buying a German company from its two founders. Before any money moves, the two sides have to agree exactly what is being sold, for how much, and what happens if the company turns out not to be what the sellers said it was. The share purchase agreement is where all of that is written down.

The detail varies from deal to deal, but most agreements are built from the same parts.

The warranties usually take the longest to negotiate. They are the seller's statements about the company's accounts, contracts, employees and disputes, and they decide who bears the loss if a problem surfaces after the sale.

In a share purchase the buyer acquires the company itself, with everything it owns and everything it owes. In an asset purchase the buyer picks the parts of the business it wants and leaves the company, and whatever was not chosen, with the seller.

That difference is why warranties matter so much more in a share purchase. A buyer who takes the whole company takes its history too.

Signing is the moment the parties commit to the agreement. Closing, which English lawyers call completion, is when the shares and the money actually change hands. The two can happen on the same day. When a condition has to be met first, such as clearance from a competition authority, weeks or months can pass in between, and the agreement sets out how the company must be run in the meantime.

Under EU law, in principle yes. Article 25 of the eIDAS Regulation gives a qualified electronic signature the same legal effect as a handwritten one in every member state, and says that no electronic signature can be refused as evidence simply because it is electronic.

What the regulation does not do is override national rules about form. Article 2(3) leaves those intact, and several countries require a notary when shares change hands. In Germany, both the agreement to sell shares in a GmbH and the transfer itself must be in notarial form (GmbHG, section 15(3) and (4)). In the Netherlands, shares in a BV are transferred by a deed executed before a Dutch notary (Dutch Civil Code, Article 2:196(1)). In the example above, the German target means a notary is involved however the parties would prefer to sign.

Where national law imposes no such form, the parties are free to choose. For a document that transfers ownership of a company, the useful question is how easily each signature could later be tied to the person who made it. A qualified signature is issued only after the signer's identity has been verified, which is where its evidential weight comes from.

The advisers do, each for their own client. Lawyers and notaries who help a client buy or sell a business entity are obliged entities under Article 3(3)(b)(i) of the EU Anti-Money Laundering Regulation, so the duty arises as soon as they take on the matter.

Article 20(1) sets out what that involves: identifying the client and verifying its identity, identifying its beneficial owners and understanding how the client is owned and controlled, establishing the purpose of the transaction, and checking the client and its owners against sanctions lists. For a corporate buyer, the beneficial owners are the individuals who hold 25% or more of the shares or voting rights, directly or through a chain of companies (Article 52(1)). In a cross-border deal that chain can run through several countries.

The regulation applies from 10 July 2027. Until then, the national laws that implement the EU anti-money laundering directives impose the same core duties.

One practical weakness is worth knowing about. Identity documents tend to reach the firm as email attachments, while signatures are collected in a separate signing tool. Each step may be sound on its own, but nothing connects the person who was verified to the person who signed, and that connection is what a regulator or a court will later ask about.

Under Article 77, an adviser must keep a copy of the documents and information obtained when identifying the client, together with the records needed to reconstruct the transaction. They are kept for five years from the end of the client relationship. After that the personal data must be deleted, unless another law requires it to be held for longer.