A Share Sale Agreement (SSA) or Share Purchase Agreement (SPA) is a legal contract between a seller and buyer of shares in a company that sets out terms and conditions for the sale, including:
- price
- timing
- warranties, and
- post-sale obligations
Whether one is buying or selling a stake in a company, an SSA is a must-have document that balances both parties’ interests in the transaction.
Share Sale vs Share Purchase Agreement
In practice, “Share Sale Agreement” (SSA) and “Share Purchase Agreement” (SPA) can and are used interchangeably in referring to the sale of shares, and it usually comes down to which party the lawyer drafting the agreement represents.
A lawyer acting for the seller will usually call it a Share Sale Agreement, and if acting for the buyer, a Share Purchase Agreement.
Practical benefits of an SSA
In allowing sellers to define key terms and align expectations from day one, a tailored SSA offers five main benefits.
Customise payment terms
When a deal amount is significant and the buyer prefers to pay in instalments, a Share Subscription Agreement (SSA) allows you to specify the number of instalments, their amounts, and the conditions that trigger each payment.
Set out preconditions or completion obligations
An SSA can be used to set clear steps for what must happen before a deal goes through in two common ways:
| Way | Description | Example |
| Condition Precedent | Things that must be done before the deal completes. Until these are done, the deal will not proceed | Getting board approval, clearing debts, updating regulatory filings |
| Completion Obligations | Steps to be done upon completion | Handing over transfer documents, issuing board/shareholder resolutions after payment is received |
If you’re unsure about which structure to choose, we’d be happy to guide you based on your role in the deal.
Enforce your rights
If either party pulls out or fails to pay, a signed SSA gives the other party legal remedies including suing for specific performance (to force completion) or damages.
Without a written agreement, you’re stuck proving intent and terms, which often leads to costly and avoidable disputes.
Surviving terms after the sale
Certain clauses such as non-compete terms or call options can be drafted to survive completion, continuing to protect your interests after the shares are transferred.
Shareholders’ Agreement (SHA) tie-in opportunity
When only part of the shares is sold, the SSA creates a natural opening to put a SHA in place especially if one doesn’t already exist.
This helps align all shareholders on governance, voting, dividends, and exit rights.
Considerations before signing
Certain corporate housekeeping matters can make or break your deal, so ensure the following steps are taken before adding your signature to the SSA.
Get the buyer to sign a Deed of Adherence
If there is an existing Shareholders’ Agreement (SHA), make sure the incoming buyer agrees to be bound by it, usually via a simple Deed of Adherence.
Waive pre-emption rights properly
Many SHAs or company constitutions give other existing shareholders the first right to buy any shares being sold.
As courts in Malaysia have held that failing to honour pre-emption rights can render the share transfer void, these must be formally and irrevocably waived ideally through signed consents or resolutions
Cross-check the SHA and Constitution
Before you decide to sell, check that the share sale complies with the SHA and Constitution on matters beyond the above.
Skipping the above steps could result in internal disputes or blocked transfers especially in tightly held companies or family businesses.
Difference between share sale vs subscription
While a Share Sale Agreement and Share Subscription Agreement share the same abbreviation (SSA), they serve very different purposes.
A Share Sale Agreement is used when existing shares are transferred from one shareholder to another, diluting the seller and without company involvement.
A Share Subscription Agreement is used when an investor subscribes to new shares issued by the company, increasing its capital and diluting existing shareholders.
Conclusion
When there is a dispute following a share sale or purchase, an SSA serves as legal fallback for all parties, and is often the only record of what was agreed upon.
Whether your sale is straightforward or involves custom terms, getting legal help ensures your intentions are properly documented and your rights protected.
