Purchase and sale of shares and equity interests

You want to sell your interest in a company or buy another company's controlling stake, and you need the transaction to be properly documented: price, warranties and effective transfer of control.

What is transferred and how it is documented

In a share purchase, the object is the interest in the capital: shares of a corporation (SA) or quotas of a limited liability company (SRL). The buyer acquires the company as it stands, with its assets and liabilities, unlike an asset purchase where specific assets are selected.

The transfer of non-endorsable registered shares is completed upon notice to the company and registration in the share registry book (art. 215, General Companies Law 19,550). In an SRL, the assignment of quotas must be documented in writing and recorded with the Public Registry to be enforceable against third parties (arts. 152 and 12, LGS). The purchase agreement is the basis; registration is what makes ownership effective against the company and third parties.

Price, warranties and representations

The price may be fixed or subject to adjustments for net debt and working capital at closing, or to earn-out mechanisms tied to future results. It is advisable to precisely define the formula, the reference date and who prepares the closing statements.

The core of buyer protection lies in the representations and warranties: the seller's statements about the corporate, accounting, labor, tax and contingency situation. These are complemented by indemnity clauses, time and monetary caps, and sometimes a holdback of part of the price or guarantees such as an escrow or bond. These clauses are calibrated based on the due diligence findings.

From pre-agreement to closing

The transaction usually starts with a letter of intent or memorandum of understanding, setting the framework, exclusivity and confidentiality. Due diligence follows, along with negotiation of the definitive agreement and, depending on the case, conditions precedent to closing (corporate, third-party or regulatory approvals).

Transactions of a certain size may require prior notification to the National Competition Authority under Law 27,442 when the relevant turnover thresholds are exceeded. Checking this point early avoids delays and penalties.

Common mistakes

• Signing without due diligence and assuming hidden contingencies without contractual protection
• Setting the price without defining the cut-off date or the adjustment mechanism
• Omitting registration of the transfer and being left without enforceable ownership
• Ignoring bylaw clauses on pre-emption or consent of the other shareholders
• Leaving representations and warranties generic, without time limits or indemnity caps

Frequently asked questions