What You Need To Know About Share And Unit Sales (2026 Updated)

Selling (or buying) a business doesn’t always mean selling the “business assets” like stock, equipment, and customer lists.

Often, the transaction is a share sale (for companies) or a unit sale (for unit trusts). These deals can be simpler in some ways, but they can also carry bigger hidden risks if you don’t get the structure and paperwork right from day one.

This guide is updated to reflect current expectations in New Zealand around due diligence, disclosure, and practical risk management, so you can go into a share or unit sale with your eyes open (and with fewer surprises at settlement).

Share Sale Or Asset Sale: Which One Are You Doing?

Before you negotiate price, timelines, or even “what’s included”, you need to be clear on what’s actually being sold.

What Is A Share Sale?

In a share sale, the buyer purchases the shares in a company from the current shareholder(s). The company stays the same legal entity - meaning it keeps its contracts, liabilities, employee relationships, tax history, and legal obligations.

Think of it like buying the whole “shell” of the company, including everything inside it (good and bad).

A share sale is typically documented in a Share Sale Agreement.

What Is An Asset Sale?

In an asset sale, the buyer purchases specific assets (and sometimes selected liabilities) from the seller. The buyer can often “pick and choose” what they want - like IP, stock, website, plant and equipment, and goodwill.

Asset sales can be cleaner from a risk perspective because the buyer may not inherit unknown liabilities, but they can require more “moving parts” (assigning contracts, transferring leases, migrating employees, and so on).

If you’re weighing up the difference, it’s worth understanding the practical pros and cons of share sale vs asset sale early, because it impacts everything from due diligence to warranties to settlement steps.

So Where Do Unit Sales Fit In?

A unit sale is similar in concept to a share sale - but instead of buying shares in a company, the buyer purchases units in a unit trust.

This matters because trusts are governed differently to companies, and the key controlling document is usually a trust deed (not a constitution). The mechanics, consents, and tax treatment can also differ, depending on the trust structure.

What Happens In A Share Sale In NZ?

A share sale is often appealing because the business can keep operating “as is”. The company remains the contracting party, employees usually remain employed by the same entity, and many operational accounts (like customer systems) don’t need to be rebuilt.

But because the buyer effectively steps into the shoes of the shareholder, a share sale needs careful legal and financial checking.

Common Reasons People Choose A Share Sale

• Continuity: The business continues under the same legal entity.
• Contract simplicity: Some customer/supplier contracts may not need assignment (although change-of-control clauses still matter).
• Licences and registrations: Some arrangements are easier to maintain when the entity doesn’t change.
• Commercial expectations: In some industries, “buying the company” is standard practice.

Key Steps In A Typical Share Sale Process

Every deal is a little different, but a standard share sale often includes:

1. Heads of agreement / term sheet: the key commercial terms are set out (price, deposit, settlement date, conditions, restraint, and so on).
2. Due diligence: the buyer reviews financials, legal contracts, employment matters, IP, disputes, and compliance issues.
3. Negotiating the Share Sale Agreement: price and mechanics, plus risk allocation through warranties, indemnities, and limitations.
4. Consents and approvals: for example, landlord consent, third-party contract consents, or shareholder approvals.
5. Settlement and post-settlement steps: payments, share transfers, director appointments/resignations, and Companies Office updates.

What Does The Buyer “Inherit” In A Share Sale?

This is the big one. Because the company continues to exist, the buyer can inherit:

• Known liabilities: bank lending, lease obligations, tax liabilities, employee entitlements.
• Unknown liabilities: disputes, historical non-compliance, unpaid PAYE/GST issues, warranty claims, or privacy complaints that haven’t surfaced yet.
• Operational baggage: messy contracts, unclear IP ownership, informal arrangements with contractors, or poor record-keeping.

That’s why buyers usually push hard for robust warranties and indemnities, and sellers should make sure disclosures are carefully managed and properly documented.

It can also be helpful to check whether the company’s governance documents (like a Company Constitution) or the Shareholders Agreement contain pre-emptive rights, director appointment rules, or transfer restrictions that affect whether the deal can even proceed.

What Happens In A Unit Sale (Unit Trusts)?

Unit sales can look similar to share sales at a high level - a buyer acquires an ownership interest and takes over the economic benefit of the underlying business or investments held by the trust.

But the “rules of the game” come from the trust deed and the legal nature of trusts in New Zealand.

What Are Units In A Unit Trust?

A unit trust generally splits beneficial ownership into units. Unit holders typically have rights to distributions and capital according to the terms of the trust deed.

The trustee holds legal title to the trust assets, and the unit holders hold the beneficial interest through their units.

Why Unit Sales Need Careful Checking

With unit sales, you’ll want to understand:

• What the trust owns: does it own a trading business, property, shares in a company, or a mixture?
• Trust deed restrictions: are there limits on transfers, valuation requirements, or consent requirements?
• Who the trustee is: is it an individual trustee or a corporate trustee, and does the trustee need to change?
• Liabilities and guarantees: has the trustee (or unit holders) signed guarantees, indemnities, or security documents?

Unit trusts are commonly used in property and investment structures, but they also show up in trading groups and holding structures. If the ownership is changing, you may need to think about the broader picture of changing company ownership across related entities, especially where the trust holds shares in operating companies.

Unit Sales And Third-Party Relationships

Just like share sales, unit sales can trigger “change of control” issues - even if the trust and trustee remain the same.

You’ll often need to check:

• banking and finance documents (defaults can be triggered by ownership changes)
• commercial leases (some require landlord consent if there is a change in effective control)
• supplier and customer contracts (assignment may not be required, but consent might still be)
• regulatory licences (some licences are personal to the licence holder or entity)

Because unit trust structures can get complex quickly, it’s wise to get tailored advice on the trust deed, the sale terms, and any flow-on impacts before you sign anything binding.

Key Legal Issues To Check Before You Sign

A share or unit sale is really about risk allocation. The price is important - but the legal terms determine what happens if something goes wrong later.

1) Warranties, Indemnities, And Disclosures

Most sale agreements include warranties (promises about the state of the business) and sometimes indemnities (a promise to reimburse the other party if a particular risk occurs).

In a share sale, warranties often cover things like:

• accounts and financial statements being accurate
• tax compliance (GST, PAYE, income tax filings)
• no undisclosed litigation or disputes
• ownership of assets and IP
• employees being properly paid and employed on lawful terms
• key contracts being valid and not in default

Sellers usually manage warranty risk by making disclosures (telling the buyer about exceptions). The disclosure process needs to be done carefully - if disclosures are vague, incomplete, or not properly documented, you can end up in an expensive dispute later.

2) Employee Matters

In a share sale, employees are typically employed by the same company before and after settlement - so “transfer” issues might be less obvious than an asset sale.

But you still need to check:

• employment agreements and policies
• whether any employees are on special terms (commission, bonuses, restraints)
• holiday pay and leave liabilities
• any current or threatened personal grievances

Buyers should also confirm that the company has fit-for-purpose Employment Contract documentation and that payroll practices match the contract terms (because a mismatch can become a liability after you take over).

3) Privacy And Customer Data

If the business collects customer data (names, emails, purchase history, health information, or even CCTV footage), privacy compliance should be part of due diligence.

Under the Privacy Act 2020, businesses need to handle personal information transparently and securely, and in many cases you’ll want a clear Privacy Policy that matches what the business actually does (not what someone copied from a template years ago).

In a share sale, the entity collecting the data is usually the same before and after settlement - but a change in control can still create reputational risk if customers feel surprised or mishandled.

4) Security Interests And “What’s Actually Owned”

It’s common for businesses to have assets subject to finance, retention of title arrangements, or general security arrangements.

Buyers should check:

• whether the company has granted security over its assets
• whether there are PPSR registrations that need attention
• whether finance needs to be repaid at settlement or can remain in place

If a lender has taken broad security, the business may be operating under a General Security Agreement, which can affect what can be sold, how sale proceeds are applied, and whether lender consent is required.

5) Fair Trading Risks And “Too Good To Be True” Claims

Both buyers and sellers should keep the Fair Trading Act 1986 in mind. If a seller makes misleading claims about revenue, customer numbers, contracts, or future profitability, that can lead to serious consequences.

From a buyer’s side, don’t rely on handshake assurances. Get key claims written into the agreement as warranties (or at least make them part of your due diligence).

6) Overseas Buyers, AML, And Practical ID Checks

Even when the deal is “just business”, real-world compliance can slow down settlement if you leave it late.

Depending on how the transaction is structured, parties may need to provide identity documents and satisfy anti-money laundering checks with banks, lawyers, or other reporting entities. Planning this early helps avoid last-minute delays.

What Documents Are Usually Needed?

The exact documents depend on your structure (company vs trust), the size of the deal, and whether there are third parties involved (landlords, lenders, key suppliers, franchisors).

That said, these are some of the most common legal documents and “moving parts” in share and unit sales.

Core Documents For A Share Sale

• Heads of agreement / term sheet (often non-binding except for confidentiality/exclusivity)
• Share Sale Agreement (the main contract)
• Disclosure letter (what the seller discloses against warranties)
• Deeds of restraint (if the seller is agreeing not to compete)
• Board and shareholder resolutions (approvals for share transfers, director changes)
• Companies Office updates (shareholding changes, director details)
• Settlement deliverables (keys, records, passwords, IP documentation)

It’s also common for the parties to review or update the company’s governance documents alongside the sale, especially where there will be multiple owners after settlement. This is where a refreshed Shareholders Agreement can be crucial for avoiding disputes about decision-making, dividends, and exits later on.

Core Documents For A Unit Sale

• Unit Sale Agreement (or bespoke sale agreement dealing with units and trust mechanics)
• Trust deed review (to confirm transfer rights, consents, valuation rules)
• Trustee resolutions (approving transfer and recognising the incoming unit holder)
• Updated unit register (and any required notices)
• Third-party consents (bank/landlord/supplier, if triggered)

Do You Need Due Diligence Even If You Trust The Seller?

Usually, yes. Even in friendly sales (family, friends, internal buyouts), due diligence protects both sides because it forces everyone to get clear on what’s true and what’s assumed.

Due diligence commonly covers:

• material contracts (customers, suppliers, contractors)
• financials, liabilities, and working capital expectations
• IP ownership (brand names, websites, software, designs)
• employment agreements and leave liabilities
• property and lease terms
• privacy and data security practices
• disputes, complaints, and compliance issues

Practically, it’s also a chance to confirm the sale structure is actually the right one. In many deals, parties start by talking about a “share sale” when an asset sale would be safer (or vice versa). Having that conversation early can prevent painful renegotiations later.

Don’t DIY The Legal Documents

We get it - it’s tempting to use a template and keep things moving. But in share and unit sales, the details matter. Small drafting gaps can leave you exposed to risks that cost far more than the legal fees you were trying to save.

A properly drafted agreement should reflect:

• how the price is paid (deposit, instalments, earn-outs, adjustments)
• what happens if a warranty is breached
• time limits and caps on claims
• who controls disputes and how they’re resolved
• what conditions must be satisfied before settlement
• what documents and actions must be delivered at settlement

If you’re buying or selling shares, it’s also worth reading up on the practical realities of Understanding Share Sales so you know where the “usual” risk points are before you negotiate.

Key Takeaways

• Share sales involve buying the company itself, which means the buyer may inherit both known and unknown liabilities - due diligence and warranties are essential.
• Unit sales involve buying units in a unit trust, and the trust deed and trustee arrangements often drive the deal mechanics and consent requirements.
• Before negotiating, confirm whether the deal is a share sale or asset sale, because the structure affects contracts, employees, taxes, and legal risk allocation.
• Always check for transfer restrictions in governance documents like a Company Constitution or Shareholders Agreement, and build any required approvals into the sale timeline.
• Don’t overlook employment, privacy, and security interests - these are common sources of post-settlement disputes if they’re not properly disclosed and documented.
• A well-drafted sale agreement (plus a clear disclosure process) is one of the best ways to protect both buyer and seller and keep settlement on track.

If you’d like help buying or selling shares or units, or you want a lawyer to review your sale documents before you sign, you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.