Split Exchange and Completion

This month a new share sale and purchase agreement with a split exchange and completion mechanism has been added to the Corporate Documents Folder.

Share sale agreements are usually drafted based on simultaneous exchange and completion, i.e., that completion will follow immediately after the signing of the SPA. It is simpler and easier to complete a transaction where there is no gap between the signing of the SPA and completion of the transaction. There will then be no uncertainty about when and if completion will take place. However, there may be situations where there will be conditions that need to be satisfied before completion can take place and which will necessitate a non-simultaneous or split exchange and completion. This SPA has been drafted on this basis.

A split exchange and completion will often be necessitated by the requirement for consent to be obtained from a third party. The parties will therefore not want to move to completion until they are certain that the conditions, whatever they are, have been satisfied. This agreement includes provision for conditions to be satisfied or waived by the buyer before the parties proceed to completion as well as how the business should be conducted in the interim period between exchange and completion.

As with the standard SPA, this template is a short form document designed for a relatively simple transaction, with short form warranties and no tax provisions. It is essential that before embarking on a share sale, customers take all necessary legal, tax and financial advice.