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Share Purchase Agreement
I need a share purchase agreement for the acquisition of 100% of the shares in a private limited company, with provisions for a purchase price adjustment based on net working capital, representations and warranties from the seller, and a non-compete clause for a period of 2 years post-completion.
What is a Share Purchase Agreement?
A Share Purchase Agreement forms the legal backbone of any major stock transaction in the Netherlands, spelling out how one party will buy shares from another. This contract captures all the key details: the exact price per share, when the sale will happen, and what guarantees the seller makes about the company's condition.
Under Dutch civil law, this agreement must include specific protections for both buyer and seller, like warranties about financial statements and any hidden liabilities. It typically covers important practical matters too - from how to handle employees after the sale to what happens if someone breaks the agreement. Most Dutch SPAs also include rules about getting approval from competition authorities if needed.
When should you use a Share Purchase Agreement?
A Share Purchase Agreement becomes essential when you're buying or selling significant company shares in the Netherlands, particularly for private companies or major stock transactions. Use it any time you need to transfer ownership of shares, from acquiring a competitor to selling your own business stake.
Dutch law requires detailed documentation for share transfers, making this agreement vital for protecting both parties. It's especially important when dealing with complex scenarios like partial ownership transfers, international buyers, or companies with multiple shareholders. The agreement helps prevent future disputes by clearly documenting all conditions, warranties, and post-sale obligations.
What are the different types of Share Purchase Agreement?
- Company Share Purchase Agreement: Most comprehensive version used for complete company acquisitions, including detailed warranties and indemnities
- Stock Purchase Agreement Private Company: Tailored for private Dutch BV companies, with specific provisions for shareholders' approval rights
- Agreement For Sale Of Shares To Another Shareholder: Simplified version for internal transfers between existing shareholders
- Stock Subscription Agreement: Used for new share issuances rather than transfers of existing shares
Who should typically use a Share Purchase Agreement?
- Selling Shareholders: Dutch company owners looking to exit or reduce their stake, including founders, investors, or family business owners
- Purchasing Parties: Companies or individuals buying shares, often including private equity firms, strategic buyers, or other Dutch corporations
- Corporate Lawyers: Dutch legal experts who draft and negotiate the Share Purchase Agreement terms, ensuring compliance with local corporate law
- Financial Advisors: Help structure deals and verify financial warranties in the agreement
- Notaries: Required under Dutch law to execute and formalize share transfers, especially for BV companies
- Company Directors: Sign off on representations about company status and often remain involved post-transaction
How do you write a Share Purchase Agreement?
- Company Details: Gather accurate corporate information including Chamber of Commerce registration, articles of association, and shareholder registry
- Share Information: Document the exact number, class, and nominal value of shares being transferred
- Purchase Price: Determine and document the agreed price, payment terms, and any earn-out structures
- Due Diligence: Complete financial, legal, and operational company checks before drafting
- Warranties: List all seller's representations about company status, debts, and contracts
- Regulatory Approval: Check if Dutch competition law requires prior clearance for the transaction
- Notarial Requirements: Schedule appointment with a Dutch civil law notary for execution
What should be included in a Share Purchase Agreement?
- Party Details: Full legal names and addresses of buyer, seller, and company under Dutch law
- Share Description: Precise details of shares being transferred, including class, nominal value, and numbers
- Purchase Price: Clear payment terms, timing, and any adjustments or earn-out mechanisms
- Warranties: Standard Dutch law representations about company status, assets, and liabilities
- Transfer Mechanics: Process for notarial deed execution and registration requirements
- Governing Law: Explicit choice of Dutch law and jurisdiction clause
- Non-Competition: Post-completion restrictions following Dutch competition rules
- Tax Indemnities: Protection against pre-completion tax liabilities
What's the difference between a Share Purchase Agreement and an Asset Purchase Agreement?
A Share Purchase Agreement differs significantly from an Asset Purchase Agreement in several key ways under Dutch law. While both involve business transactions, they serve distinct purposes and carry different legal implications.
- Transaction Object: Share Purchase Agreements transfer company ownership through shares, while Asset Purchase Agreements deal with specific business assets, equipment, or property
- Liability Transfer: With share purchases, the buyer inherits all company liabilities automatically. Asset purchases let buyers choose specific assets without taking on historical company obligations
- Legal Process: Share transfers require notarial deeds under Dutch law, while asset transfers often don't
- Tax Implications: Share deals typically involve transfer tax considerations, while asset deals may trigger VAT and require different tax treatment
- Employee Rights: Share purchases maintain all employment relationships unchanged, while asset deals may require specific employee transfer arrangements
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