Share transfer agreement, notarial deed and company register in a share deal

A share transfer agreement typically consists of three layers. The first layer describes the transfer process itself: seller, buyer, the share with its capital portion and the description of the company with its register number. Without a precise description of the share the contract runs into a void. In particular with partial shares the split and the transfer have to correspond exactly.

The second layer governs the purchase price and its treatment. Here come the amount, due date and modality of payment. Common is a confirmation of payment directly in the deed or shortly afterwards. Where adjustment mechanisms such as working capital or net debt clauses are agreed, they are recorded in substance either in the notarial deed or in the underlying contract of obligation.

The third layer captures warranties, indemnities and ancillary obligations. Often the entire SPA warranty catalogue, or a reference to it, is already part of the notarial deed, supplemented by the operational handover. How the warranty catalogue is technically structured is shown by the post on the SPA warranty catalogue. The concept of share assignment is explained in the glossary.

The notarial deed is a special form that certain legal transactions in Austria require. For the transfer of GmbH shares it is mandatory. The notary checks the identity of the parties, explains the declarations, records them in a protocol and seals the original. An execution copy of the deed serves the parties as the document, the original remains with the notary.

At the appointment the contract is executed in the version drawn up by the notary. Last-minute change requests have to be incorporated without rush. Larger amendments call for a new draft. For that reason experienced parties send the final version at least a few days before the appointment and align the course of events including the required attachments.

Often further acts are recorded by the notary at the same time. These include the removal and reappointment of the managing directors, amendments to the articles of association or the admission of new shareholders by way of a capital increase. In this way the entire completion can be bundled in one appointment. The focus page on share purchase agreement shows how the deed and the contract interlock.

After execution the managing directors file the new state of shareholders with the company register. The filing and the supporting documents are submitted electronically. It is common for the notary to handle the procedure. The entry has declaratory effect but creates the external visibility of the change that is decisive for banks, contractual partners and authorities.

Within four weeks of reaching beneficial ownership the update in the beneficial owner register has to be made. This obligation falls on the company but can be delegated to the notary, lawyer or tax adviser. Whoever misses the deadline risks administrative fines and the rejection of other filings.

Finally operational follow-up duties have to be discharged: notice to banks and contractual partners, update of the shareholders list, change at material contracts with a change-of-control clause and adjustment of internal powers of attorney. Deeper context on the conditions is provided by the post on closing conditions. The concept of the company register is explained in the glossary.

Often the share purchase agreement, the SPA, is set up separately from the share transfer agreement. The SPA contains warranties, purchase price adjustments, closing conditions and all economic rules. The notarial deed then carries out the in-rem transfer. Both documents must be aligned in a contradiction-free way.

It is also possible to combine all content in a single notarial deed. This compact form saves a contract layer but makes the deed long and unwieldy. In larger transactions the two-tier structure with the SPA and a lean assignment agreement is more common because it facilitates negotiations.

In any event the notarial deed should clearly govern which document has priority in case of contradiction. The usual rule is that the later signed document or the more specific deed prevails. How warranties and closing conditions fit into the contract framework is shown in the post on the SPA warranty catalogue.