Reading time: 6 minutes

Taking over a company and business by purchasing its shares (instead of purchasing the assets) can lead to an easier transition. This is because the essential contracts with customers, suppliers and employees will stay in place. However, there are risks. The idea of purchasing all of the shares in a private company may appear reasonably basic once you have agreed on a purchase price. Yet, as the buyer, there are several important documents and steps to ensure that you obtain the shares’ legal title. One such document is the share sale agreement. This article will explore what documents you will need when purchasing all of a company’s shares. 

Share Sale Agreement

A share sale agreement is the longest and most detailed document you will handle when purchasing a company’s shares. While other documents in the transaction are essential, you should devote most of your attention and effort to getting this document correct. It is a common mistake that people try to rush this document. A well-drafted share sale agreement will, among others, address the following items:

  • the number of shares you will purchase;
  • the purchase price for the shares; 
  • whether you will buy the shares in a lump sum or by instalments;
  • if there are conditions which need to be satisfied before the sale can complete, for example, the landlord’s consent;
  • the obligations on completion to allow for the legal transfer of ownership – termed completion obligations; 
  • a full set of promises (also known as warranties) the seller should provide about the shares, business and company; 
  • if there will be a non-compete preventing the seller from operating a similar business after completion; and 
  • confidentiality and dispute resolution provisions. 


Usually, the seller’s lawyer will draft this agreement, and your lawyer will review it. During negotiations, your lawyer’s role is to strike the right balance between the seller and you (as the buyer). The seller’s lawyer will often draft the share sale agreement to be very favourable to the seller. Thus, you should prepare yourself for several rounds of negotiations, which can take a couple of weeks to months. A skilled lawyer will guide you through this process and explain the critical legal points.

The most heavily negotiated points often relate to what will happen if there is a breach or disagreement in the future. This includes the limits on the seller’s liability where one of the warranties (promises) is untrue and the amount of time you have to bring a claim. 

There are standard warranties included in most agreements. However, the most important will be those specific to the business in question, which are highlighted by your investigations of the business. An example includes, the seller not being aware of any reason a client could terminate their contract. 

Due Diligence

Purchasing all of a company’s shares comes with ownership of any of its past trading risks. This can include debts to the Australian Taxation Office or work done for customers. 

The first step to protect yourself is to complete due diligence on the company. This can involve both legal and financial due diligence. Your legal team can assist by conducting searches of the company and reviewing key contracts. For example, you should ensure that the contracts are satisfactory to lock in key clients. 

Your accountant or financial advisor can review the business’s financial records to provide you with details concerning:

  • the business’s value; and 
  • risks relating to taxation, payroll, and superannuation. 

The timing of due diligence can occur before or after you have signed the share sale agreement. If after, the agreement should allow you to walk away from the sale if you discover anything unsatisfactory. You can also address any risks that you uncover by adding additional warranties. 

Completion Obligations 

The share sale agreement will set out several completion obligations. These are obligations that you must complete, or the seller must hand over at completion. Many of these will relate to assurances about the seller’s ability to sell the shares and the company’s approval of it. Also, there must be approval of the change in control relating to the shareholders and directors. 

Generally, these include the following documents: 

  • Directors resolution – a written resolution signed by the directors approving the transfer of the shares, cancellation or issue of share certificates and any directors resignations and appointments;
  • Shareholders resolution – a written resolution of the shareholders approving the transfer of the shares and accepting the waiver of any pre-emptive rights;
  • Waiver of pre-emptive rights – the shareholder will all sign this waiver to confirm that they are not enacting their rights to purchase the shares; 
  • Share Transfer Form – a form which sets out the transfer of the shares from the seller to you, and the purchase price paid for the shares; 
  • Share Certificate – the seller’s share certificate will be cancelled, and a new share certificate issued to you; and 
  • Appointment/removal of directors – the current directors will need to provide signed notices of resignation, and the new directors will need to sign letters of consent to act.

Shareholders’ Rights 

If the company has a Shareholders Agreement and Constitution, you should review these documents to ensure that the sale complies with these documents’ requirements. 

Most companies have a Shareholders Agreement that provides shareholders with ‘pre-emptive rights’ to purchase shares if they are being sold or issued. This means that current shareholders have the first opportunity to buy shares being sold or issued. If they have this right, then all of the selling shareholders will need to sign a waiver of these pre-emptive rights. 

Notification to ASIC

Once a share sale has completed, the company must notify ASIC within 28 days of the changes to shareholders, directors and any address changes. You can do this by completing Form 484 available on the ASIC website.

Key Takeaways

From a transition perspective, purchasing shares in a company can make it easy to take over ownership of a business. While the share sale agreement is the most important document, there are many documents and steps required to reflect the transfer of the shares. However, there are risks. It is best practice to conduct due diligence on the company and ensure that any warranties in the share sale agreement reduce the risks. If you considering purchasing a company’s shares, contact LegalVision’s business purchase lawyers on 1300 544 755 or fill out the form on this page.


Redundancies and Restructuring: Understanding Your Employer Obligations

Thursday 7 July | 11:00 - 11:45am

If you plan on making a role redundant, it is crucial that you understand your employer obligations. Our free webinar will explain.
Register Now

How to Sponsor Foreign Workers For Your Tech Business

Wednesday 13 July | 11:00 - 11:45am

Need web3 talent for your tech business? Consider sponsoring workers from overseas. Join our free webinar to learn more.
Register Now

Advertising 101: Social Media, Influencers and the Law

Thursday 21 July | 11:00 - 11:45am

Learn how to promote your business on social media without breaking the law. Register for our free webinar today.
Register Now

Structuring for Certainty in Uncertain Times

Tuesday 26 July | 12:00 - 12:45pm

Learn how to structure to weather storm and ensure you can take advantage of the “green shoots” opportunities arising on the other side of a recession.
Register Now

Playing for the Prize: How to Run Trade Promotions

Thursday 28 July | 11:00 - 11:45am

Running a promotion with a prize? Your business has specific trade promotion obligations. Join our free webinar to learn more.
Register Now

Web3 Essentials: Understanding SAFT Agreements

Tuesday 2 August | 11:00 - 11:45am

Learn how SAFT Agreements can help your Web3 business when raising capital. Register today for our free webinar.
Register Now

Understanding Your Annual Franchise Update Obligations

Wednesday 3 August | 11:00 - 11:45am

Franchisors must meet annual reporting obligations each October. Understand your legal requirements by registering for our free webinar today.
Register Now

Legal Essentials for Product Manufacturers

Thursday 11 August | 11:00 - 11:45am

As a product manufacturer, do you know your legal obligations if there is a product recall? Join our free webinar to learn more.
Register Now

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Matthew DeRusha
Need Legal Help? Submit an Enquiry

If you would like to get in touch with our team and learn more about how our membership can help your business, fill out the form below.

Our Awards

  • 2020 Innovation Award 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Award 2020 Employer of Choice Winner – Australasian Lawyer
  • 2020 Financial Times Award 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year Award 2021 Law Firm of the Year - Australasian Law Awards
  • 2022 Law Firm of the Year Winner 2022 Law Firm of the Year - Australasian Law Awards