Buying or selling a company: the share purchase agreement (SPA)

The SPA (Sale and Purchase Agreement) is the contract that documents the sale of shares in a Sociedad Limitada. It identifies the parties, the shares sold (with their numbering), the price, the payment method and the risk allocation between buyer and seller. Whoever buys the shares buys the entire company with everything inside it: assets, contracts, staff, debts and contingencies. That is why the SPA is not a simple receipt, but the tool that protects each party.

The core of the contract is the seller's representations and warranties: they declare that the accounts show a true and fair view, that the company is up to date with Hacienda (the Spanish tax authority) and the Seguridad Social (the Spanish social security system), that there are no hidden disputes or debts and that key contracts are in force. If any statement turns out to be false, the buyer can claim compensation under the agreed terms.

The contract is completed by specific indemnities for risks already detected, liability limits (minimum amount per claim, maximum cap and deadlines to claim), the seller's non-compete agreements and, if the closing is not immediate, the conditions precedent that must be met before signing before a notario.

Due diligence is the prior review of the company carried out by the buyer before signing. It usually covers tax, labour, commercial and corporate areas, contracts with clients and suppliers, ongoing litigation, real estate and assets, intellectual and industrial property and data protection.

Its result directly feeds the SPA: what appears in the review translates into a price adjustment, a specific indemnity or a condition for closing. What the seller formally communicates in the disclosure schedule is excluded from the general warranties, so it is in both parties' interest that this schedule is accurate.

It is not a mandatory procedure by law, but buying without reviewing means blindly assuming the company's contingencies. In smaller transactions, a reduced review focused on the main risks is carried out (red flags report).

The usual starting point is to value the company cash free and debt free: the cash is added to the business value and the existing financial debt on the closing date is subtracted, with a correction if the working capital deviates from its normal level.

There are 2 mechanics to apply this adjustment. With completion accounts, the price is recalculated after signing with a balance sheet prepared at the closing date. With a locked box, the price is fixed on a previously closed balance sheet and the seller guarantees that since that date no value has been extracted from the company (prohibition of leakage). The first is more accurate; the second is simpler and faster.

An earn-out is a deferred payment conditional on future results (sales or EBITDA of the coming financial years). It is useful when buyer and seller do not agree on the company's value, but it is the clause that generates the most disputes: it requires precisely defining the metrics, who manages the company during the period and which buyer decisions cannot harm the objective.

The general rule of art. 107 of the Ley de Sociedades de Capital (the Spanish Corporate Enterprises Act) is that, unless the articles of association provide otherwise, the sale is free between partners and in favour of a spouse, ascendants, descendants or companies of the same group. To sell to a third party, the articles of association govern; if they do not regulate anything, the supplementary legal regime applies.

In this supplementary regime, the partner notifies the directors in writing of the shares they want to sell, the buyer's identity, the price and the conditions. The sale is subject to the company's consent, which is agreed at the General Meeting by an ordinary majority. The company can only deny it if it presents, through a notario, 1 or more partners or third parties willing to buy all the shares; and if no partner or third party wants them, the General Meeting itself can agree that the company acquires them, to amortise them or in accordance with art. 140 LSC (art. 107.2.d LSC). If 3 months pass without a response, the partner can sell under the communicated conditions, but must formalise the transfer in a public document within the following 1 month after that period expires (art. 107.2.f LSC): if they let that 1 month pass, the authorisation lapses and the procedure must be restarted. If the price is deferred, the pre-emptive acquirer must provide a guarantee from a credit institution for the deferred amount.

Skipping these rules has a high cost: a transfer that does not respect the law or the articles of association has no effect against the company (art. 112 LSC), so the buyer will not be registered in the registry book nor will they be able to exercise their partner rights. In practice, when all partners agree, the transaction is closed with the express waiver of each partner to their pre-emptive acquisition right, usually in a universal meeting, and this waiver is incorporated into the deed of sale. Managora prepares the waivers and communications so that the sale is unassailable.

Yes. Art. 106 LSC requires the transfer of shares to be recorded in a public document. The deed before a notario is what allows the buyer to prove their status as a partner and oppose the purchase against third parties. Managora drafts the contract and coordinates the signing at the notary's office; the only official cost is the notary fee, which varies according to the transaction amount (RD 1426/1989) and is paid at the notary's office on the day of signing.

The buyer can only exercise partner rights against the company once it has knowledge of the transfer (art. 106.2 LSC). Therefore, after signing, the sale is formally notified to the administrative body and recorded in the partner registry book (art. 104 LSC): the company only considers as a partner whoever is registered in that book.

The sale is not registered in the Commercial Registry: the ownership of the shares lives in the company's registry book. There is an important indirect exception: if with the purchase the company comes to have a single partner, the supervening single-member status must be recorded in a deed and registered in the Commercial Registry; if 6 months pass without registering it, the sole partner is personally, unlimitedly and jointly liable for the corporate debts contracted during that period (arts. 13 and 14 LSC).

The buyer does not pay indirect taxes: the transfer of shares is exempt from VAT and the Transfer Tax and Stamp Duty (art. 338 of Ley 6/2023, on Securities Markets). The exemption does not eliminate the formal obligation: as it is a subject and exempt transaction, in most autonomous communities the buyer must still submit the modelo 600 marking the exemption, with no fee to pay. The only exception with a fee is the anti-avoidance clause: if the company is essentially real estate and the sale of shares is intended to avoid the tax that would have levied the direct sale of the properties, the transaction is taxed as if they were transferred.

The individual seller pays IRPF (personal income tax) on the capital gain (transfer value minus acquisition value), which is integrated into the savings base with the scale from 19% to 30% in force in 2026. Pay attention to the rule of art. 37.1.b) of the Ley del IRPF: unless it is proven that the agreed price is market value, Hacienda does not admit a transfer value lower than the higher of 2 amounts, the net equity of the last closed balance sheet or the result of capitalising at 20% the average of the results of the last 3 financial years.

If part of the price is collected deferred (for example, an earn-out) and the last collection is due more than 1 year after the sale, the seller can use the instalment operations rule (art. 14.2.d of the Ley del IRPF) and impute the gain as the collections become due, instead of paying tax on everything in the year of signing.

If the seller is a company (for example, a holding company selling its subsidiary), the capital gain can be 95% exempt in the Corporate Income Tax if it has held at least 5% of the capital uninterruptedly during the previous 1 year (art. 21 LIS). With the general rate of 25%, the effective taxation is around 1.25% of the profit.

Managora takes care of the entire process: we review the articles of association, draft the SPA with its warranties, prepare the waivers to the pre-emptive acquisition right, coordinate the signing at the notary's office and make the formal notification to the company for the registry book. Each transaction is different in size and complexity, so the fees are set through a personalised quote: request it from the Share Purchase Agreement (SPA) and Elevation to Public Status procedure page.