If you own a business with other shareholders, where multiple parties are involved, it is best to be prepared for a situation where one or more shareholders want to leave the business. This is a 3 part series on what to consider when a shareholder leaves. Article 1 discussed administrative and company secretarial requirements. Article 3 will consider protecting confidential information, intellectual property and imposing a non-compete clause.

What type of sale of shares agreement do I need?

A sale of shares agreement can be simple, or detailed, depending on the circumstances. Where the seller and buyer know the company well, then it can be a simple agreement. Where the buyer is new to the company, then a more detailed agreement is generally required.

What does the sale of shares agreement need to address?

The sale of shares agreement may address the following issues, including detailed warranties for a sale of a large tranche or sale by a founder:

  • Price
  • Tranches: How and when the shares will be purchased, e.g. all in one parcel, or over a period of time. A seller will generally want to sell their shares in one parcel.
  • Earn out: Any earn-out provisions, for example, will the seller be required to stay for a period of time and work in the business, and be paid out according to how the business performs? A buyer will generally want earn-out provisions so that the price paid depends on how the business performs over a period of time, e.g. 1 to 3 years.
  • Company obligations: The company’s obligations on sale, including to carry out the administrative and company secretarial requirements.
  • Completion details: Including what each party will provide, for example, whether the seller will provide their previous share certificate, and any company credit or debit card, etc.
  • Title: Warranties that the seller owns and has good title to the shares.
  • Operations: Warranties about the business operations. These can be simple or detailed, depending on the buyer’s requirements. Common and important warranties include that the business has been conducted according to law, that the business is solvent, and that the business has all required regulatory approval to operate.
  • Tax: Warranties about the business tax, including that the business has paid tax when due and payable, and correctly calculated tax requirements.
  • Employees: Warranties about the employees, including that superannuation is up to date, and that there are no employee claims against the company.
  • Litigation: Warranties about litigation, including that there is no litigation against the company.
  • Intellectual property: Intellectual property protection, including that the seller assigns all intellectual property regarding the business, to the business.
  • Confidentiality provisions – see Part 3
  • Restraint of Trade – see Part 3
  • Releases: Releases, including that the seller has no claims against the business for a suite of potential claims including employment issues and debts.
  • Limitations: Limitations on buyers and sellers liability including for tax on the sale of the shares.
  • Disputes: A dispute resolution clause.


At LegalVision we have specialist commercial lawyers who can assist you to draft a sale and purchase of shares agreement and to negotiate the terms to protect your interests in the sale or purchase.

LegalVision has high-quality experienced business lawyers. Please call our office on 1300 544 755. We will happily provide you with a fixed-fee quote and an obligation-free consultation.

COVID-19 Business Survey
LegalVision is conducting a survey on the impact of COVID-19 for businesses across Australia. The survey takes 2 minutes to complete and all responses are anonymous. We would appreciate your input. Take the survey now.

About LegalVision: LegalVision is a tech-driven, full-service commercial law firm that uses technology to deliver a faster, better quality and more cost-effective client experience.

The majority of our clients are LVConnect members. By becoming a member, you can stay ahead of legal issues while staying on top of costs. For just $199 per month, membership unlocks unlimited lawyer consultations, faster turnaround times, free legal templates and members-only discounts.

Learn more about LVConnect

Ursula Hogben
Need Legal Help? Get a Free Fixed-Fee Quote

If you would like to receive a free fixed-fee quote or get in touch with our team, fill out the form below.

  • By submitting this form, you agree to receive emails from LegalVision and can unsubscribe at any time. See our full Privacy Policy.
  • This field is for validation purposes and should be left unchanged.
Our Awards
  • 2019 Top 25 Startups - LinkedIn 2019 Top 25 Startups - LinkedIn
  • 2019 NewLaw Firm of the Year - Australian Law Awards 2019 NewLaw Firm of the Year - Australian Law Awards
  • 2020 Fastest Growing Law Firm - Financial Times APAC 500 2020 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review 2020 AFR Fast 100 List - Australian Financial Review
  • 2020 Law Firm of the Year Finalist - Australasian Law Awards 2020 Law Firm of the Year Finalist - Australasian Law Awards
  • Most Innovative Law Firm - 2019 Australasian Lawyer 2019 Most Innovative Firm - Australasian Lawyer
Privacy Policy Snapshot

We collect and store information about you. Let us explain why we do this.

What information do you collect?

We collect a range of data about you, including your contact details, legal issues and data on how you use our website.

How do you collect information?

We collect information over the phone, by email and through our website.

What do you do with this information?

We store and use your information to deliver you better legal services. This mostly involves communicating with you, marketing to you and occasionally sharing your information with our partners.

How do I contact you?

You can always see what data you’ve stored with us.

Questions, comments or complaints? Reach out on 1300 544 755 or email us at info@legalvision.com.au

View Privacy Policy