Tax Warranties in the Share Purchase Agreement - A Practical Workshop

Introduction

Tax warranties play a central role in allocating tax risk in share acquisitions and remain one of the most heavily negotiated aspects of a Share Purchase Agreement (SPA). Their scope and drafting are influenced by factors including the target's tax profile, the findings of tax due diligence, disclosure, and the parties' respective bargaining position.

This practical, face-to-face workshop will provide delegates with a comprehensive understanding of the purpose and function of tax warranties in private M&A transactions. Expert speaker David Klass will examine the principal categories of tax warranty commonly found in SPAs, explaining what each is intended to achieve and the risks it is designed to address.

This course will also consider how tax warranties interact with tax covenants and specific tax indemnities, the impact of tax due diligence on warranty drafting, and the key issues that arise when negotiating warranty limitations and qualifications.

Throughout the workshop, practical examples and drafting scenarios will illustrate current market practice and provide delegates with valuable insights into negotiating and reviewing tax warranty provisions.

What You Will Learn

This course will cover the following:

• The role of tax warranties in allocating tax risk in share acquisitions
• The principal categories of tax warranties found in a typical SPA
• The purpose and function of each key tax warranty
• The relationship between tax warranties, tax covenants and tax indemnities
• How tax due diligence findings influence the drafting and scope of tax warranties
• The effect of disclosure on tax warranty protection
• When specific tax risks should be addressed by indemnity rather than warranty
• Less common tax warranties relevant to particular transactions and tax issues
• Negotiating key limitations on tax warranty claims, including:
• Awareness qualifications
• Materiality thresholds
• Financial limitations
• Time limits
• Disclosure qualifications
• Qualification by awareness - when is this appropriate?
• Qualification by time - how far back should tax warranties extend?
• The role of tax reliefs and how they are addressed through warranties and claims
• Current market practice and how tax warranties have evolved in recent years
• Practical drafting considerations and common negotiation issues
• Interactive discussion of practical examples and drafting scenarios
• Q&A session addressing delegates' questions and real-world issues