Share sale or site sale?

Share sale or site sale?


Author: Kelly Grant

Purchasing the share capital of a Special Purpose Vehicle (SPV), rather than the land owned by the SPV, may be unfamiliar to developers

With proper advice, however, this option could be considered if the seller of a desirable development site prefers to proceed on that basis.


Acquisitive developers, looking for suitable sites for residential development, are increasingly faced with requests to buy the share capital of an SPV that owns a site, rather than the more traditional conveyance of the site owned by the SPV.

Approached with the proper diligence and support from corporate law specialists, the acquisition of an SPV can be an effective means by which to acquire sites.

The fundamental difference

If a specific asset - in this case land - is purchased by a developer from an SPV, then only that land which has been identified and investigated by the developer will be acquired. The corporate status (and any unrelated liabilities) of the SPV are largely irrelevant.

If a developer is buying the share capital of an SPV, then all of that company's assets, liabilities and obligations (even those which the developer does not know about) are transferred to the developer.

Due diligence

Developers (and their advisers) are experienced in investigating title to a site and conducting the relevant searches to ascertain its suitability for development.

They are, perhaps, less familiar with making the corporate/commercial enquiries in respect of the SPV that owns the site.

Whilst the assumption may be that the only asset owned by the SPV is the potential site, it is critical that the developer conducts thorough due diligence to identify (among other things) any:

  • other assets held by the SPV
  • contracts, agreements or arrangements to which the SPV is party
  • liabilities for which the SPV is or may become liable
  • tax which is or may become payable by the SPV

During due diligence, the developer should also undertake the same property searches/investigations on the site that it would if it were entering into a more traditional conveyance.

Due diligence will assist the developer in assessing the price to be paid for the share capital of the SPV and the level of protection it needs in documenting the share purchase.


Buying an SPV instead of a site is a very different process.

An acquisition of shares in an SPV will not involve Land Registry transfers, Land Registry priority searching, or applications for registration.

Instead, a share purchase agreement will need to be negotiated and executed, which would usually contain warranties and a tax covenant in respect of the SPV, so the buyer has some protection on the status of the SPV and the site.


The tax treatment of the transaction is likely to be a prominent driver for a seller's desire to sell the share capital of the SPV, rather than the site.

There are also potential tax advantages to a developer buying shares in an SPV rather than its assets (i.e. a site). The relative pros and cons should always be carefully considered with the appropriate tax advice, on a case-by-case basis.


This note is a brief summary of some of the issues associated with buying land-owning SPVs.

For more detailed advice, either on a specific site or more generally, please contact Kelly Grant on 03700 868398 or email [email protected]