In any Share Purchase Agreement (SPA), Representations and
Warranties play a crucial role in allocating risk between the buyer
and the seller. They serve as assurances about the state of the
company being acquired, highlighting known risks and providing the
buyer with a degree of certainty and confidence in the
transaction.
Within this context, a key question arises:
‘Who should provide these Representations and
warranties; the Directors of the Company or its
Shareholders?'
On the one hand, the directors bear the responsibility for
running the company's business affairs and possess an
in-depth understanding of its financial position, operating
intricacies, risks and liabilities. On the other hand, it is
typically the shareholders who stand to derive financial benefit
from the sale of their interest in the company. In smaller
companies where the shareholders and directors are the same
individuals, this distinction is largely inconsequential. However,
when the
