The nature and governance challenges of share sale transactions

Abstract

This thesis looks at the way UK law does, and should, deal with contracts for the sale and purchase of shares in private UK companies. This thesis aims to describe the nature of share sale transactions, and then to describe, and to evaluate, the law which regulates them. Share sale transactions, despite their significance, are perhaps relatively unfamiliar to academic lawyers, as well as to many non-specialised legal practitioners and the wider public. It is valuable, therefore, to describe how these important deals are concluded, and the complex contractual documentation that records them. Part of describing these transactions entails explaining the commercial challenges which the parties face, and especially the important phenomenon of ‘informational asymmetry’ which exists between them.
In addressing the subject of share sales, this thesis seeks to do three things.

The first is doctrinal/descriptive: it asks whether the law (primarily contract law, but also tort law) does indeed tend to favour sellers.

As part of that assessment, at times, there is a light-touch reference to US law, which is generally thought to be buyer-friendly, as well as to the law of other jurisdictions.

The second thing the thesis does is explanatory: it considers the reasons why the law has adopted the pro-seller stance which the doctrinal part of the thesis sets out.

The third is to evaluate the law’s stance here and, following this evaluation, suggest some changes to the law’s approach.