- Business in Poland -

Share Purchase Agreement (SPA) – What Must It Include and Which Clauses Are Key?

A Share Purchase Agreement (SPA) is a contract governing the transfer of ownership of shares in a company (most commonly a Polish limited liability company, i.e. a sp. z o.o.) from the seller to the buyer, including the purchase price, transaction terms, and the allocation of risks between the parties. In Poland, an SPA typically supplements (and structures) elements that already follow from mandatory law—primarily the Polish Commercial Companies Code (the KSH) and the Polish Civil Code (the KC)—while also adding the more extensive transaction provisions typical of M&A deals.

Share Purchase Agreement (SPA) – mandatory elements and formal risks

When selling shares in a sp. z o.o., it is crucial to comply with the required form: a written agreement with signatures certified by a notary (Article 180 KSH). Failure to meet this requirement results in the transaction being invalid. At the same time, you must verify any restrictions in the company’s articles of association, such as a requirement for the company’s consent to the transfer of shares or other transferability limitations (Article 182 KSH).

At a minimum, a share purchase agreement should include:

• identification of the parties and proof of authority (including corporate representation, corporate approvals, and powers of attorney),
• a precise description of the shares being sold (number and nominal value of shares and their total value; as a rule, a sp. z o.o. does not have share “classes/series”),
• the purchase price and payment terms,
• the moment title to the shares transfers (usually upon signing, unless the parties make the transfer subject to a condition or a term),
• the parties’ statements that there are no legal obstacles to the transaction,
• provisions on consents and notifications (e.g., toward the company),
• miscellaneous/final provisions (governing law, court/arbitration, confidentiality).

SPA checklist – areas that should be covered in the draft

A well-prepared SPA checklist covers not only “what to put in the agreement,” but also “what to verify before signing” and “what must happen by the closing date.” In practice, it is helpful to structure the agreement as follows: (1) definitions, (2) subject matter and price, (3) conditions precedent, (4) closing, (5) representations and warranties, (6) liability and security, (7) additional provisions (e.g., non-compete), (8) disputes and confidentiality.

SPA conditions precedent – when the transaction does not take effect “immediately”

SPA conditions precedent allow the effectiveness of the share transfer or the obligation to pay the purchase price to depend on specified events. In business transactions, this reduces the buyer’s risk and gives the seller a predictable path to completion.

Typical conditions precedent include:

• obtaining corporate approvals (e.g., shareholder resolutions) or the company’s consent if required by the articles of association (Article 182 KSH),
• a bank’s consent to a change of control and/or the release of security,
• completion of a pre-sale reorganisation,
• delivery of documents confirming the legal and financial status of the company,
• no material adverse change (MAC), if the parties decide to include such a mechanism (always fact-specific).

SPA purchase price mechanism – fixed price, locked box, or post-closing adjustment

The SPA purchase price mechanism determines whether the price is set upfront or subject to adjustments. The most common approaches are:

• fixed price – a straightforward price payable in full or in instalments,
• locked box – a price based on historical reference accounts, with a prohibition on value “leakage” up to closing,
• closing accounts – a price based on closing-date figures with a subsequent true-up (e.g., net debt, working capital).

The right mechanism depends on the quality of financial data, the financing structure, and the parties’ appetite for disputes over calculations. In Polish transactions, price-adjustment disputes often stem from vague definitions of net debt or working capital—so definitions and calculation examples should be carefully drafted.

SPA representations and warranties – the foundation of risk allocation

SPA representations and warranties are a set of statements by the seller (and sometimes also the buyer) regarding the condition of the company and the shares; a breach triggers contractual liability. The scope can be broad—from title to the shares, through tax matters, contracts, employees, and disputes, to compliance and data protection.

Three elements are particularly important:

1. Scope of warranties – what exactly is warranted and as of which date (signing/closing).
2. Disclosures – what has been disclosed in the data room or in a disclosure letter and therefore excludes liability.
3. Remedies – how losses are calculated, and what time limits, thresholds, and caps apply.

Seller liability in an SPA – caps, thresholds, time limits, and exclusions

Seller liability in an SPA is usually contractually “tailored,” i.e., modified as compared to the default rules under the Civil Code. Parties commonly include:

• de minimis – a minimum value for an individual claim,
• basket – an aggregate threshold after which claims may be pursued,
• cap – an upper limit of liability (often a percentage of the purchase price),
• claim notification periods – different for tax, litigation, and employment matters,
• exclusions – e.g., no liability for disclosed matters.

It is worth remembering that freedom of contract has limits (Article 353¹ KC), and liability exclusions may not work identically in every factual scenario. In higher-risk deals (e.g., white-collar criminal aspects, misconduct, corruption), it is standard to strengthen the liability regime and introduce additional protections.

SPA escrow – securing the purchase price and warranty claims

SPA escrow involves depositing part of the purchase price into an escrow account or with an escrow agent for a defined period. This protects the buyer in case of claims for breach of representations and warranties, and helps the seller show that claims should be set off only under the agreed procedure.

Alternatives include a holdback (retaining part of the price) or W&I insurance (Warranty & Indemnity). The choice depends on bargaining power, the risk profile, and the cost of the instruments.

How to negotiate an SPA – practical checkpoints

How to negotiate an SPA in a commercially safe way:

• Start by agreeing the structure: asset deal vs share deal, scope of carve-outs, and any required reorganisation (fact-specific).
• Prepare a closing deliverables list and assign responsibility for providing each item.
• Decide which risks are “price-related” (impacting the pricing mechanism) and which are “liability-related” (caps, escrow, time limits).
• Protect confidentiality and plan crisis communications if the transaction may have reputational or employee-related implications.
• Align the SPA with the shareholders’ agreement (SHA), if one exists or is to be implemented, to avoid conflicting obligations.

This material is provided for informational purposes only and does not constitute legal advice. For support in preparing or reviewing transaction documentation and assessing risks (including white-collar crime and compliance risks), the lawyers at Kopeć & Zaborowski are available—so if you need an analysis of a specific transaction, please contact us.

FAQ – Share Purchase Agreement (SPA)

Is an SPA mandatory for the sale of shares in a Polish limited liability company (sp. z o.o.)?

There is no obligation to use a comprehensive SPA, but the share transfer agreement itself must comply with Article 180 KSH (written form with notarised signature certification) and reflect any restrictions in the articles of association.

What is most commonly disputed in an SPA?

The most common points of dispute are: the scope of and disclosures against representations and warranties, the purchase price adjustment mechanism, definitions of net debt/working capital, and the seller’s liability time limits and caps.

Which SPA conditions precedent are most common?

Typically these include corporate approvals, consents from financing institutions, delivery of documents and confirmations, and sometimes a no-MAC condition if precisely defined by the parties.

What is the difference between locked box and closing accounts?

Locked box sets the price based on historical figures and prohibits value leakage until closing, while closing accounts provide for a post-closing price true-up based on closing-date figures.

When is an SPA escrow worth using?

Most often when the buyer needs effective security for warranty claims or where risks are hard to quantify at signing (e.g., tax or litigation exposure).

Can seller liability be fully excluded in an SPA?

In practice, parties can significantly limit liability (caps, thresholds, time limits), but the effectiveness of exclusions depends on the wording and the circumstances, taking into account the limits of freedom of contract under Article 353¹ KC.

Bibliography

• [1] Act of 15 September 2000 – Polish Commercial Companies Code (Kodeks spółek handlowych, Journal of Laws 2000 No. 94, item 1037, as amended), in particular Articles 180 and 182.
• [2] Act of 23 April 1964 – Polish Civil Code (Kodeks cywilny, Journal of Laws 1964 No. 16, item 93, as amended), in particular Article 353¹.