What occurs in a shares sale transaction?

In a share sale transaction, the buyer acquires ownership of the shares in a corporation, which means they take control of the entire entity along with all its assets and liabilities. This includes not only the tangible and intangible assets but also any existing debts, obligations, and other liabilities the corporation may have. As a result, the buyer is responsible for the company’s financial standing and any potential risks associated with it.

This comprehensive assumption of both assets and liabilities is a core element of share transactions, as the buyer effectively steps into the shoes of the seller regarding the corporation's previous commitments. It is important to understand this aspect, as it differs significantly from an asset sale, where only specific assets and liabilities are identified and transferred, and the seller retains some obligations.

In this context, the alternative choices reveal different scenarios that do not accurately reflect the nature of a share sale. For instance, the notion of the seller retaining liabilities misrepresents the transfer of responsibility in a share sale. Additionally, the idea that the company is dissolved after the sale does not apply, as the corporation continues to exist as a legal entity post-transaction. Likewise, the assumption of only profits is misleading, as it neglects the liabilities aspect that comes along with the share acquisition.