What is a Share Purchase Agreement?

A Share Purchase Agreement (SPA) is a legally binding contract between a buyer and a seller for the sale and purchase of shares in a company. This agreement outlines the terms, conditions, and obligations related to the transfer of shares, including pricing, number of shares, warranties, liabilities, and payment structure.

SPAs are critical during investment rounds, private equity transactions, founder exits, mergers, or ownership restructuring. They ensure that all parties are on the same page regarding what’s being sold, the rights being transferred, and any post-sale commitments.

Whether you're a founder transferring equity, an investor acquiring shares, or a business entering a partnership, a Share Purchase Agreement provides legal clarity and financial security.

✅ Benefits of Share Purchase Agreement

🎯 Provide 7 strong benefit points, written from the client’s perspective.

1️⃣ I protect myself legally when buying or selling company shares
2️⃣ I ensure fair pricing and transparency in the transaction
3️⃣ I define rights, warranties, and obligations clearly
4️⃣ I prevent post-sale disputes or future liabilities
5️⃣ I meet compliance and regulatory requirements
6️⃣ I safeguard minority or majority ownership interests
7️⃣ I enable smooth due diligence for investors or buyers

📑 Documents Required for Share Purchase Agreement

📂 List all required documents with relevant emojis and brief explanations.

1️⃣ 🧾 PAN & Aadhaar of Buyer & Seller – Identity verification for both parties
2️⃣ 🏢 Company Incorporation Certificate – To verify legal existence of the company
3️⃣ 📈 Shareholding Pattern (Cap Table) – Current ownership structure of the company
4️⃣ 📜 Board Resolution – Approval for transfer or allotment of shares
5️⃣ 💼 Valuation Report (if applicable) – To justify share pricing
6️⃣ 📋 Existing Share Certificates – Proof of share ownership being transferred

👤 Who Needs a Share Purchase Agreement?

🧾 This service is ideal for:

• Startup founders issuing equity to investors

• Private limited companies transferring ownership

• Angel investors or VCs acquiring startup shares

• Businesses executing mergers or buyouts

• Legal advisors managing corporate transactions

🔄 Process of Getting a Share Purchase Agreement

🔁 Provide a step-by-step explanation of how the service is executed from start to finish.

1️⃣ Consultation – Understand the deal structure, parties involved, and share details
2️⃣ Information Collection – Gather shareholding data, company docs, and ID proofs
3️⃣ Drafting the SPA – Prepare a detailed, custom agreement as per applicable law
4️⃣ Review & Negotiation – Both parties review and request any changes
5️⃣ Signing the Agreement – Final version is signed digitally or physically
6️⃣ Issuance of Share Certificates – Company updates records and issues new certificates

⏱️ Timeline for Share Purchase Agreement

⏳ Drafting and executing a Share Purchase Agreement typically takes 3 to 5 business days. Timelines may vary depending on negotiation rounds, share valuation, and board approvals.

❓ Frequently Asked Questions (FAQs) about Share Purchase Agreement

1️⃣ What is the difference between a Share Purchase Agreement and a Shareholders Agreement?
An SPA covers the transfer of shares, while a Shareholders Agreement governs ongoing rights and responsibilities of shareholders.

2️⃣ Is a Share Purchase Agreement mandatory for share transfers?
Yes, especially in private companies, to record the transaction and protect both parties.

3️⃣ Do I need a valuation report for share transfer?
Not always, but it’s advisable when transferring shares between unrelated parties or for regulatory compliance.

4️⃣ Can the SPA be used for partial share transfer?
Yes, you can use an SPA to sell any number of shares, whether partial or full ownership.

5️⃣ Is board approval required for share transfer?
Yes, especially in private companies where Articles of Association may restrict share transfers.

6️⃣ What happens after signing the SPA?
The company must update its share register and issue a new share certificate to the buyer.

7️⃣ Can SPA include confidentiality and non-compete clauses?
Yes, it can be customized to include additional clauses to protect interests.

8️⃣ Is stamp duty applicable on share transfers?
Yes, stamp duty is applicable as per state laws on transfer of shares.

9️⃣ Can I execute the agreement online?
Yes, with digital signatures, most SPAs can be legally signed and stored electronically.

🔟 What legal recourse do I have if the other party breaches the agreement?
An SPA is enforceable in court and includes remedies such as indemnities or damage recovery.