Share Purchase Agreement

Share Purchase Agreement in the Netherlands

Dutch legal advice on SPAs and share transactions

A Share Purchase Agreement, or SPA, is the purchase agreement used for the sale and purchase of shares in a company. In a share transaction, the buyer does not acquire separate assets. The buyer acquires the shares in the target company.

Need broader guidance? See also Purchase Agreement in Dutch M&A transactions or Asset Purchase Agreement (APA) for asset transactions.

In an SPA transaction, the target company remains the same legal entity. Contracts, employees, permits, assets, debts and historic risks generally remain within the company. For that reason, an SPA is more than a document recording the purchase price. It is the central transaction document for risk allocation, warranties, indemnities, disclosure, closing and post-closing obligations.

I advise entrepreneurs, investors, buyers, sellers and M&A advisers on Share Purchase Agreements in Dutch M&A transactions, private equity transactions, strategic acquisitions and management participations.

When is an SPA used?

An SPA is used when the buyer acquires the shares in a target company. The company continues to exist; only the shareholder changes.

This can be efficient where the business is transferred as a whole and existing contracts, permits, employees and operations should remain in place. For sellers, a share transaction can be attractive because they sell the company including its business. For buyers, it is important to understand which historic risks are indirectly acquired.

The SPA should therefore be closely aligned with due diligence, warranties, indemnities, purchase price mechanisms, financing, notarial share transfer and post-closing obligations.

Key points in an SPA

In an SPA, the negotiation often focuses on risk allocation. The buyer wants protection against risks identified during due diligence or risks that may emerge after closing. The seller wants certainty on the purchase price and a clear limitation of post-closing liability.

Key topics include purchase price, locked box or completion accounts, warranties, indemnities, disclosure, liability limitations, closing conditions, non-compete obligations, management arrangements, vendor loans, earn-outs and post-closing obligations.

For buyers, due diligence findings should be translated into the SPA through specific warranties, indemnities, price adjustments, conditions or covenants. For sellers, liability should be limited through caps, baskets, de minimis thresholds, claim periods, disclosure and knowledge qualifiers.

Disclosure, warranties and indemnities

Warranties and indemnities are often at the heart of SPA negotiations. The buyer will typically require warranties on shares, accounts, tax, contracts, employees, permits, IP, litigation, debt, compliance and ordinary course operations.

The seller will qualify these warranties through disclosure. A properly prepared disclosure letter helps prevent known facts from later being treated as warranty breaches. For professional parties, disclosure should be specific, complete and well structured.

Specific indemnities are usually used for identified risks, such as pending litigation, tax issues, employee claims or contractual problems. These should be drafted clearly, including duration, scope and procedure.

Signing, closing and notarial transfer

Signing and closing do not always take place at the same time. Between signing and closing, conditions may need to be satisfied, such as financing, shareholder approvals, regulatory approvals, FDI screening, contractual consents or other closing deliverables.

The transfer of shares in a Dutch BV takes place by Dutch notarial deed. The SPA should therefore align with the notarial documentation, shareholder resolutions, articles of association, transfer restrictions and any existing shareholders’ agreement.

Need advice on an SPA?

If you are an entrepreneur, buyer, seller, investor or M&A adviser and need Dutch legal support with a Share Purchase Agreement, I can assist.

Dirk de Waard advises on drafting, reviewing and negotiating SPAs in Dutch and cross-border transactions. He assists with transaction structure, due diligence, warranties, indemnities, disclosure, purchase price mechanisms, closing and notarial implementation.

Contact Dirk de Waard at dirk.dewaard@viottalaw.com to discuss your SPA or proposed share transaction.