Share Transfers in Capital Companies: Issues to Re-consider

Most purchasers' main objective in a company acquisition is taking over the absolute control of the target company with minimum liability. In share purchase deals, which are the most resorted to means of acquisition, the ownership of the target company's shares are transferred from the seller to the purchaser. The latter means that the purchaser steps into the shoes of the seller and the operation of the legal entity continues in an uninterrupted manner. Unless specifically agreed to through a "representations and warranties clause" to be inserted into the share purchase agreement, subsequent to the share transfer, the seller has no continuing interest in or obligation with respect to the assets, liabilities or operations of the legal entity in question¹.