Notarial escrow of the purchase price when transferring a business share
The situation escrow addresses
The same tension regularly arises when a business share is transferred. The transferor is unwilling to sign the agreement before the purchase price is available to them, because after signing they lose control over what happens next. The acquirer, in turn, is unwilling to pay before being entered in the Commercial Register as a shareholder, because until then they cannot be certain of acquiring what they are paying for. Both positions are justified from the standpoint of protecting their respective interests.
For lower-value transfers or transfers between people who have known each other for a long time, this situation is usually resolved through trust or by splitting the payment into several instalments. For larger sums, a foreign acquirer, or parties who have not previously done business together, such solutions cease to be sufficient.
Legal basis and mechanism
Notarial escrow is governed by Act No. 323/1992 Coll. on Notaries and Notarial Activities. Under § 65, a notary accepts, among other things, money into escrow at the request of the depositor. Section 68 then sets out the required particulars of the escrow of money, including the amount, the purpose of the escrow and the parties’ agreement on how the money is to be handled.
In practice, this means that the acquirer deposits the purchase price with a notary and relinquishes the right to dispose of it at will. Neither contracting party controls the funds, and the notary may release them only in accordance with conditions agreed in advance and recorded in the escrow deed. A typical condition for the transfer of a business share is that the purchase price is paid to the transferor once the change of shareholder in favour of the acquirer has been entered in the Commercial Register; if registration does not take place within the agreed period, the funds are returned to the depositor.
Wording of the release condition
The effectiveness of the entire arrangement depends on how precisely the release condition is worded. The notary is not an arbitrator of disputes between the parties and cannot decide which party is right; the notary must be able to establish clearly and objectively whether the condition has been met.
For this reason, an appropriate condition is the registration of the change of shareholder, evidenced by an extract from the Commercial Register: a fact verifiable from a public register. By contrast, the proper handover of the company and its records is an unsuitable condition, because determining what constitutes a proper handover requires an assessment the notary is not authorised to make. In addition to the condition itself, it is necessary to specify the time limit for its fulfilment, the consequences if it is not fulfilled, and how the funds held in escrow will be handled if the transfer does not take place.
Status of funds held in escrow
Clients regularly ask what happens to the funds if an unforeseen circumstance arises on the notary’s side. Money accepted into notarial escrow is held separately from the notary’s assets and does not form part of them. It therefore cannot be subject to enforcement proceedings against the notary or form part of a bankruptcy estate. The notary is also required to carry liability insurance for damage caused in the performance of notarial activities, and their work is subject to the supervision of the Chamber of Notaries of the Slovak Republic.
Comparison with other forms of escrow
Escrow arrangements with a lawyer or bank follow the same principle and are both legitimate instruments. The differences lie in the details. Notarial escrow is regulated directly by law; the notary draws up a deed recording it and acts as an impartial person who represents neither party’s interests. Bank escrow tends to follow standardised procedures and offers less flexibility in setting release conditions.
A practical advantage of notarial escrow in a business share transfer is that the notary administering the escrow generally also draws up the share transfer agreement, which must meet formal requirements under § 115(4) of the Commercial Code. The release condition and the wording of the agreement are thus prepared together, preventing inconsistencies between them — a real risk when the two documents are prepared separately.
When escrow is appropriate
Not for every transfer. For a share transfer within a family or between long-standing shareholders, escrow is an additional step without a corresponding benefit. It is justified, however, where the parties do not know each other or the value is higher; where the acquirer is a foreign person and payment comes from abroad; where the transfer depends on other conditions, such as the removal of a pledge or a third party’s consent; or where part of the price is to be paid only after certain facts about the company have been verified.
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We will arrange the escrow alongside the agreement If you are transferring or acquiring a business share, contact us before signing. We will review the release conditions with you, draw up the agreement and the escrow deed, and arrange for the change of shareholder to be entered in the Commercial Register. Notary Office, Stará Vajnorská 8, Bratislava III. |
Legislation cited in this article
Act No. 323/1992 Coll. on Notaries and Notarial Activities (Notarial Code) — § 65, § 67, § 68
Act No. 513/1991 Coll., Commercial Code — § 114 et seq., § 115(4)
Act No. 29/2026 Coll. on the Commercial Register — § 42, § 58
This text reflects the law as at 11 September 2026. It is for information purposes and does not replace legal advice on a specific matter. Current fees are available in the office’s price list.
JUDr. Martin Vlha, PhD., notary · Notary Office, Stará Vajnorská 8, Bratislava III
