Share Sale

A share sale is a transaction structure in which the buyer purchases the shares of the corporation that owns the business, rather than acquiring the business's assets directly. After a share sale, the corporation — with all its assets, liabilities, contracts, and history — continues under new ownership.

Sellers generally prefer share sales because they preserve access to the Lifetime Capital Gains Exemption (LCGE), which applies only to qualifying share transactions. Buyers generally prefer asset sales because share purchases expose them to the seller's historical corporate liabilities — including tax reassessments, undisclosed lawsuits, and legacy employee obligations — even if those liabilities are unknown at the time of purchase.

In a share sale, existing contracts (including leases, customer agreements, and supplier contracts) typically continue in the name of the corporation without requiring third-party consent for assignment. However, change-of-control clauses in those contracts may still be triggered, requiring counterparty notification or consent.

See also: Asset Sale, LCGE, QSBC, Purchase Agreement, Change of Control.