Non-Simultaneous Execution And Closing In Share Sales: Key Considerations

Concluding a Share Purchase Agreement (SPA) can occur either as a single-stage or a two-stage process, depending on whether execution and closing (sometimes referred to as completion) are simultaneous or distinct events. When a SPA involves a two-stage process the SPA is executed first, (i.e. the parties make a legal commitment to proceed with the transfer of the shares by delivering their signed SPA to the other party) but the actual transfer of the shares (and often the payment of the consideration) take place at a later date, often referred to as the closing date. At such subsequent date (i.e. the closing date), the closing occurs during which all necessary actions are undertaken to effectuate the transfer of the shares. Where there is an interval between execution and closing, several matters should be considered when drafting the SPA.