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Drafting a share purchase agreement involves fully documenting the purchase and sale of shares in a private limited company (BV): the object, the purchase price and method of payment, the suspensive conditions, the guarantees and indemnities, the non-compete clause, and the closing schedule. A good agreement distributes the risks between buyer and seller in a manner consistent with the findings of the due diligence investigation. The essential elements are listed one below the other.
The short answer
- Subject: which shares, which percentage, in which private limited company.
- Purchase price: fixed amount or earn-out, plus payment date and collateral.
- Suspensive conditions: what must be arranged before delivery.
- Warranties and indemnities: for which the seller is responsible, with thresholds and ceilings.
- Non-compete and non-solicitation clause: the seller may not compete directly.
- Closing: the blueprint for the notarial transfer.
Drafting a share purchase agreement: start with the object
The first building block is the object of the purchase. Describe exactly which shares are being sold: the number, the numbering, the percentage of the issued capital, and the company in which they are held. This is particularly important in the case of a partial sale, because the buyer then becomes a co-shareholder and the relationship with the remaining shareholders must be settled.
Also stipulate that the shares are delivered free and unencumbered — that is, without any pledge, attachment, or obligation to make an offer that blocks the transfer. Such encumbrances often only surface during the due diligence investigation.
Purchase price and payment method
The purchase price can be a fixed amount or partly dependent on future results via an earn-out. With an earn-out, you precisely define how it is calculated, over what period, and based on which figures — otherwise, disputes will almost certainly follow. Furthermore, regulate:
- Payment date: a lump sum at closing or in installments.
- Any collateral: bank guarantee, escrow, or deferred payment.
- A settlement mechanism if working capital or net debt deviates at closing.
Formulate warranties and indemnities clearly
This is where the Schwerpunkt of the agreement lies. The guarantees are the seller's statements regarding the company: the financial statements present a true and fair view, taxes have been paid, there are no unknown proceedings pending, and the most important contracts are valid. Incorporate limitations to this:
- Threshold amount: small claims below a minimum lapse.
- Ceiling: maximum liability, often a percentage of the purchase price.
- Duration: guarantees usually apply for 12 to 24 months, tax guarantees longer.
Indemnities are something different: with them, the seller fully assumes a specific, known risk — for example, an ongoing dispute or an uncertain tax liability. Indemnities generally have no threshold or ceiling, because they concern a named risk that belongs entirely to the seller.
suspensive conditions and closing
Often, delivery cannot take place immediately. In that case, you include suspensive conditions: matters that must be settled before closing, such as bank financing, consent from co-shareholders, or the lifting of a pledge. As long as these are not fulfilled, the transaction does not proceed.
You record the closing itself as a script: which documents are signed, in what order, how the purchase price is paid, and when the notary executes the deed. Also include what happens if a party withdraws at the last moment.
Non-competition, confidentiality and other provisions
A seller who sells their business and starts again around the corner the very next day erodes the value the buyer pays. A non-compete clause of reasonable duration and scope prevents this. Supplement this with a non-solicitation clause (not taking clients or staff) and confidentiality. Furthermore, it should include: applicable law, a dispute resolution mechanism, and agreements regarding how cooperation will proceed after the closing.
A brief example: a contractor sells his private limited company to a peer in the industry. The agreement includes a two-year earn-out, a guarantee on the work-in-progress position, an indemnity for an ongoing dispute with a subcontractor, and a four-year non-compete clause within the province. At closing, a portion of the purchase price is held in escrow until the guarantee period expires.
Honest recommendation
You can often outline the main points—object, price, payment date—yourself, and for a very simple transfer within an acquaintance circle, a tight, short contract is sometimes sufficient. You do not need a lawyer for the commercial agreements. However, the warranties, indemnities, and limitations of liability determine who pays after closing if something goes wrong, and that is precisely where things almost always go wrong without experience: warranties that are too broad for the seller, or conversely, too little protection for the buyer.
As soon as real amounts or unknown risks are involved, have the agreement drafted or reviewed. Also read what is a share purchase agreement and having a share purchase agreement drafted. For a custom document: share purchase agreement.
Frequently Asked Questions
The object (which shares), the purchase price and method of payment, suspensive conditions, guarantees and indemnities, a non-compete clause, and the closing script. Additionally, applicable law and a dispute resolution mechanism. The guarantees and indemnities constitute the focal point.
As a fixed amount or partly via an earn-out dependent on future results. Precisely define the payment date, any collateral such as escrow or a bank guarantee, and a settlement mechanism for working capital or net debt to prevent future disputes.
Matters that must be settled before delivery takes place, such as bank financing, consent from co-shareholders, or the lifting of a pledge. As long as these have not been fulfilled, the transaction will not proceed.
With a threshold amount (small claims are waived), a ceiling (maximum liability, often a percentage of the purchase price), and a term (usually 12 to 24 months, tax guarantees longer). This ensures the risk for the seller remains manageable.
For a specific, known, or suspected risk, such as an ongoing dispute or an uncertain tax item. The seller then assumes that risk in full, usually without a threshold or ceiling, because it concerns a named risk that belongs to him regardless.
To prevent the seller from starting over immediately after the sale and eroding the value paid by the buyer, supplement it with a non-compete clause and confidentiality. The duration and scope must be reasonable; otherwise, the clause is difficult to enforce.
A script: which documents are signed, in what order, how the purchase price is paid, and when the notary executes the deed. Also include what happens if a party withdraws at the last moment, and whether part of the price remains in escrow.
