Updated 3 November 2026
Every business sale in South Africa takes one of two shapes. Either the buyer takes over the company that owns the business, or the company sells the business itself and stays behind. Which shape you choose changes what you're responsible for after the sale, how tax works and how much paperwork there is.
A share sale: the buyer takes the whole company
If your business runs inside a (Pty) Ltd, you can sell your shares. The company doesn't change at all — same name, same bank account, same contracts, same staff. It just has a new owner.
- Simpler for day-to-day trading: contracts, licences and accounts usually stay in place, though some contracts need the other side's approval when the owner changes.
- The buyer takes on the company's history, including old tax or legal problems. That's why they will check it closely and ask you for promises in the agreement.
- Sellers often prefer it, because the business — and its past — leaves with the shares.
An asset sale: the buyer takes only the business
Here the company (or you, if you trade as a sole owner or partnership) sells the business: equipment, stock, customer lists, the name, the goodwill. The company stays with you, along with anything the buyer didn't agree to take over.
- Buyers often prefer it, because they choose what they take and leave old risks behind.
- More paperwork: each important contract, lease and licence may need to be moved across, often with the other side's consent.
- It's the only option if the business isn't run through a company.
What happens to your staff
In a share sale, employees stay with the same employer — the company — so nothing changes for them on paper. In an asset sale of a going concern, section 197 of the Labour Relations Act generally moves employees to the buyer automatically, on terms that are on the whole no less favourable. Either way, the agreement should spell out who covers leave pay and other amounts built up before the sale.
Tax, in broad strokes
- Capital gains tax can apply to the profit you make on the sale in both cases — on you in a share sale, on the selling company in an asset sale.
- Buying shares in a South African company usually attracts securities transfer tax, normally paid by the buyer.
- An asset sale is normally subject to VAT, but the sale of a business as a going concern can be charged at 0% if the strict conditions are met and written into the agreement.
So which one should you choose?
There's rarely a perfect answer, only a trade-off. Share sales are usually cleaner for the seller; asset sales usually feel safer for the buyer. The price often moves depending on which way you go, which is why it pays to decide early — before a buyer decides for you.
