Jurisdiction(s):
United Kingdom

Key definition

Share purchase definition

What does Share purchase mean? A share purchase is the acquisition of shares in a target company—typically all, or a controlling stake—so the buyer becomes the shareholder exercising control while the company continues to own its business. Because the company remains the legal owner of its assets and bearer of its obligations, the buyer effectively inherits the company with all assets, contracts and liabilities (including unknown or contingent liabilities), managed through due diligence, warranties, indemnities and price adjustments. Used across private M&A, it is usually documented by a share purchase agreement (SPA) and completed by share transfers and corporate approvals, with any required...

Share purchases: employment warranties, disclosure (including standards), seller knowledge/awareness, limitations (caps, floors, buckets), split exchange and completion, claims procedures and indemnities

Published by a LexisNexis Employment expert

Practice notes

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This Practice Note

This Practice Note sets out guidance on warranties, disclosure and indemnities for advisers handling the employment elements of acquiring all the Issued share capital of a company, ie a Share purchase. It explains how these topics sit alongside the due diligence exercise and outlines potential constraints on warranties, such as caps, floors and collars (or buckets), together with the seller’s knowledge or awareness and the scope of disclosure. Where the purchaser acquires the entire issued share capital of the employing company (a share purchase), the shareholders may change, but the employee–employer contractual relationship remains intact; the share deal itself does not effect a change of employer or alter the Contract of employment. This is different from an asset acquisition, where the Transfer of Undertakings (Protection of Employment) Regulations 2006, SI 2006/246 (TUPE 2006) operate to transfer the contracts of affected employees to the buyer. TUPE 2006 also affords specific protection for employees concerning variation of terms and dismissal, creates duties to inform and consult, and requires the seller to supply specified employee liability information to the buyer (see: TUPE and asset purchases—overview). In a share purchase, that position applies; TUPE protections attach to asset transfers. No such...

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Web page updated on 21/05/2026

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