Share or asset sale? Planning and environmental due diligence in NSW

A share purchase and an asset sale change different legal things. A share purchase transfers shares and may change control, but the company remains the same legal person. Its land, approvals and regulatory history remain with it. An asset sale transfers selected property and rights, but only some statutory instruments follow the asset.

Due diligence should identify what each consent, licence, notice, obligation, liability or entitlement attaches to: the entity, land, owner, occupier, operator, activity or a separately transferable right. That analysis is more useful than treating either transaction structure as inherently safer.

Neither structure eliminates statutory risk

A share buyer buys into an entity that keeps its historic and contingent liabilities. An asset buyer can leave many personal liabilities with the seller, but may become an owner, occupier or operator to whom legislation assigns fresh obligations.

The sale contract can allocate economic risk between buyer and seller through conditions, warranties, indemnities, price adjustment, retention and insurance. It does not bind a regulator. Section 6(6) of the Contaminated Land Management Act 1997 (NSW) (CLM Act), for example, expressly preserves a responsible person’s statutory responsibility despite a contract assigning it elsewhere.

Continuity turns on what the instrument attaches to

Instrument or risk	What it attaches to	Share purchase	Asset sale	Pre-completion action
Development consent	The consent continues to authorise the development on the land according to its terms	If the target owns the land, the registered owner is unchanged; its compliance history and breaches remain too	An operative consent may continue to authorise development on the land; historical penal or personal liability does not transfer merely because the land is conveyed	Obtain every consent, approved plan, modification, condition, bond and commencement record; test lapsing and compliance
Environment protection licence (EPL)	The named licence holder and specified premises/activity	If the target is the holder, the licence remains with it; conditions and history remain	The EPL does not move merely because premises or plant are sold; use the statutory transfer process	Make transfer and any variation a completion condition; align operational handover with the effective transfer
Contaminated land responsibility and duty to report	The contaminator and, in specified circumstances, the owner or occupier; the owner has a separate reporting duty	The target retains responsibility arising from its activities and may remain owner/occupier	Historic personal liability may remain with the seller, but the buyer becomes owner and may face owner duties or orders	Phase 1 assessment; Phase 2 where indicated; search notices and notifications; assess the section 60 reporting position before exchange and again before completion
Notices and costs under the Protection of the Environment Operations Act 1997 (NSW) (POEO Act)	Depending on the power, the recipient, polluter, owner, occupier, person carrying on the activity or land	Notices to the target and its compliance history continue	A buyer may receive a fresh owner/occupier notice; registered notices and charges may affect the land	Search the NSW Environment Protection Authority (EPA) public register and title; obtain all notices, variations, compliance evidence and cost claims
Biodiversity stewardship agreement (BSA)	Registered stewardship land and its successors; credits are separate statutory rights	If the target owns the site, it remains bound and may separately hold credits	A purchaser of registered stewardship land is bound; unsold credits do not automatically follow the land	Review the registered BSA, management plan, compliance and payment history, public credit register, Total Fund Deposit (TFD) and any proposed credit transfer
Water access licence (WAL)	A separately registered water entitlement	A WAL held by the target remains with it, subject to existing dealings and conditions	Land transfer alone does not transfer the WAL; a section 71M dealing may be required	Search the WAL register; specify licence, share and extraction components, allocations, security interests and settlement registration
Water-use and work approval	The holder and, where land is specified as benefited, successive landholders	The target remains holder while it is the landholder of the benefited land	Section 106 can treat successive landholders of benefited land as holders	Confirm the benefited land, works, nominations, metering, term, conditions and any amendment needed for subdivided or retained land
Approval under the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act)	The person or entity named as approval holder	If the target company is the holder and remains the same legal entity, a shareholder change does not itself substitute a new holder	A change to the person responsible for the approved action generally requires statutory transfer	Have the current holder seek transfer before it ceases to exist or relinquishes responsibility; verify approval period, conditions and compliance

The matrix is a starting point. A single project can hold approvals in different group entities, use land owned by another entity and operate through a contractor. Build an entity–land–instrument map before deciding what continuity the transaction structure provides.

Development consent: land continuity is not compliance

An operative development consent continues to authorise the approved development on the land according to its terms. That land-facing operation must be kept separate from historical offences, civil penalties, accrued debts and personal obligations. A conveyance does not, without the statute saying so, transfer the vendor’s penal or personal liability to the purchaser.

The consent’s continuing operation is supported by the binding Court of Appeal decision in Hunter Industrial Rental Equipment Pty Ltd v Dungog Shire Council [2019] NSWCA 147, an appeal from civil-enforcement proceedings about a quarry consent. At [50], Basten JA quoted Spigelman CJ at [4] in Winn v Director-General of National Parks and Wildlife (2001) 130 LGERA 508; [2001] NSWCA 17. Spigelman CJ, acknowledging a point made by Stein JA in the same appeal, described a consent as having “an inherent quality that it will be used to the benefit of subsequent owners and occupiers” and as a document that “must be construed in accordance with its enduring functions”. In Hunter, Gleeson JA agreed with Basten JA at [224]. Preston CJ of the Land and Environment Court agreed with Basten JA’s conclusions and reasons at [265], adding observations of his own on how a development consent is construed. The passage concerns the public, enduring operation and construction of a development consent; it does not say that a conveyance transfers the former operator’s accrued personal, penal or contractual liabilities.

That continuity does not cure a lapsed consent, enlarge its scope or discharge conditions. Review:

• the operative notice and incorporated plans and documents;
• deferred-commencement requirements;
• evidence of lawful physical or actual commencement under section 4.53 of the Environmental Planning and Assessment Act 1979 (NSW);
• all modifications and the development as finally approved;
• conditions, contributions, bonds, planning agreements and outstanding orders; and
• whether the intended post-completion use remains within the consent.

The modification rules changed on 21 March 2026. A modification with no environmental impact now falls under section 4.55(1), alongside corrections of a minor error, misdescription or miscalculation. Under section 4.55A and section 118A of the Environmental Planning and Assessment Regulation 2021 (NSW), the consent authority must determine any section 4.55(1) application within 14 days after lodgement; once that period has passed it must, with one narrow exception, not refuse it. An application lodged but not finally determined before 21 March 2026 is still determined under the former provisions (Schedule 6, section 34A of the Regulation), as the Department’s commencement summary also explains. Check the lodgement date of each modification in the data room before deciding which pathway applied. See Modifying a development consent in NSW.

EPLs, historic liability and land-facing notices

Under the POEO Act, the occupier of premises where scheduled development work or a premises-based scheduled activity is carried on commits an offence unless it holds a licence authorising that work or activity at those premises (section 47 and section 48). For a scheduled activity that is not tied to premises, the offence falls on the person who carries it on (section 49). A licence that relates to premises must specify them, covering the whole of the premises where the licensed activities are carried on (section 56). A share sale normally leaves the corporate holder in place. That preserves operational continuity but also leaves its licence history, unpaid amounts, breaches and conditions in the target.

For an asset sale, the licence moves only by statutory transfer. An application under section 54 needs the current holder’s written consent (section 59(3)), and the regulatory authority may grant or refuse it under section 55. A transferred licence keeps the conditions it had at the time of transfer (section 55(3)), subject to any variation made on transfer under section 58(4). In its licensing functions the authority must consider, where relevant, whether the person concerned is a fit and proper person (section 45(f)); section 83 lists matters it may weigh, including compliance history and financial capacity.

Signing a business-sale contract does not authorise the buyer to carry on a scheduled activity in the interim. A buyer that becomes the occupier, or starts carrying on the activity, before the transfer takes effect risks the offence in section 47, 48 or 49. Nor can the parties move licence obligations by contract: section 7A provides that an obligation imposed under environment protection legislation, including under an EPL, may not be delegated or transferred unless the Act imposing it expressly provides for that. Check that licence fees are paid, too. If a fee or other amount payable in relation to a licence is unpaid, the authority may recover it from the current holder, which after a transfer is the buyer, or may instead recover the part relating to an earlier holder’s period from that earlier holder (section 57(5)). Clear or allocate any arrears in the contract before the transfer.

Separately, a clean-up notice under section 91 can be given to an owner or occupier of premises at or from which the authority reasonably suspects a pollution incident has occurred or is occurring, and to a person reasonably suspected of causing or contributing to the incident. A new asset owner may therefore face a fresh statutory instrument even where the contract leaves historic liability with the seller. An owner that complies with a notice for an incident it did not cause, or did not solely cause, may recover the cost as a debt from any person who caused or contributed to the incident (section 91(4)). See Clean-up and prevention notices in NSW.

Title review now matters in two ways. Section 108B lets the authority that gave a clean-up or prevention notice apply to register it in relation to the land to which the notice relates, and Schedule 5, clause 86 extends that to notices already in force when section 108B commenced. A compliance cost notice may also be registered against land owned by the person who received it (section 106). Registering a compliance cost notice creates a charge on the land for the amount in the notice; registering a clean-up or prevention notice does not. Under section 107, the charge survives a change of ownership. It ends on payment, on a sale or other disposition made with the authority’s written consent, or on a sale to a good-faith purchaser for value without notice of it, and registration gives a later purchaser notice.

Search both the EPA POEO public register and the title. One is not a substitute for the other.

Contaminated land: owner exposure and the duty to report

Section 6 of the CLM Act defines responsibility for contamination. It primarily captures persons who caused contamination, but it also reaches an owner or occupier who knew or ought reasonably to have known contamination would occur and failed to take reasonable preventive steps, together with other specified categories.

Two of those categories matter to a buyer that will keep operating or will redevelop. A person who carries on activities on the land that generate or consume the same substances as those that caused the contamination, or substances that may be converted into those substances, is responsible for it unless it is established that the person did not cause it (section 6(1)(d)). A person whose act, including an application for planning approval, changes the approved use of land can become responsible for significant contamination if the resulting increase in risk leads the EPA to identify the land as significantly contaminated (section 6(2)(b) and (4)). A baseline investigation at completion helps show what was already there.

For significantly contaminated land, section 13 requires the EPA to choose the person to be subject to a management order from those responsible for the significant contamination, owners and notional owners, preferring them in that order as far as practicable. It is not practicable to choose a responsible person who cannot be found after reasonable inquiry or who, in the EPA’s opinion, cannot pay its debts, so an owner may be chosen instead. An asset buyer cannot assume that “we did not pollute” ends the analysis.

Section 60 separately requires a person whose activities contaminated land, and an owner of contaminated land, to notify the EPA when the statutory reporting criteria are met. The owner’s duty applies whether the contamination occurred before or during its ownership. Notice is due as soon as practicable after the person becomes aware of the contamination, and a person is taken to be aware of contamination it ought reasonably to have been aware of. A buyer’s own investigation reports can therefore trigger the duty once it becomes the owner. The EPA duty-to-report guidance should be applied to current evidence.

Search the record of CLM notices, the list of notified sites, council files and section 10.7 material. The EPA expressly warns that absence from the notified-sites list does not establish that land is uncontaminated. Historic aerials, dangerous-goods records, waste records, fill history and intrusive investigation may matter more than a clean register search.

Stewardship land and credits do not move as one asset

Under section 5.12 of the Biodiversity Conservation Act 2016 (NSW) (BC Act), once the Minister notifies the Registrar-General that a BSA has been entered into, the Registrar-General must register it on the title. Once the BSA is registered and in force, section 5.13 binds successors in title, including a successor to part of the stewardship land. The land obligation therefore persists across an asset sale. See NSW biodiversity stewardship agreements.

Biodiversity credits are different. Section 6.19 makes them separately transferable, while section 6.20 makes a transfer ineffective until registered. A transfer of credits does not affect the owner’s obligations under the agreement, including its management actions (section 6.19(3)). Confirm who holds each credit, whether it has been transferred or retired and what remains payable to the Biodiversity Stewardship Payments Fund.

Water: separate the entitlement from land-benefited approvals

A WAL entitles its holder to specified shares in the available water and to take water at specified times, rates or circumstances and from specified areas or locations (section 56 of the Water Management Act 2000 (NSW)). As the note to section 56 records, the licence does not itself give a right to use water for a particular purpose, or to build or use a water supply work; those rights come from separate approvals. The WaterNSW licence guide likewise describes a WAL as an entitlement on a public register that is separate from land ownership.

An asset contract must therefore say whether the WAL is included and provide for its transfer under section 71M and its registration in the Access Register. Separately, section 106 provides that an approval is held by and for each successive landholder of the land the approval specifies as benefited, and each such landholder must comply with the approval’s conditions. Verify the precise approval, land, works, WAL nomination and allocation account; none can safely be inferred from the presence of a pump or dam.

EPBC approvals after 1 July 2026

The National Environmental Protection Agency (the National EPA) was established on 1 July 2026 under the National Environmental Protection Agency Act 2025 (Cth). The National EPA’s post-approval guidance directs approval holders through the statutory transfer process. For wider context on the Commonwealth reforms, see Commonwealth environmental referrals: significant impact, timing and the 2026 transition.

An EPBC Act approval is held by a named person or entity. Under the definition of “holder” in section 528, the holder is the person named in the approval or, after a transfer, the person to whom it was transferred. A share sale does not change the legal identity of a target company that is the holder, although control changes, group reorganisations and holder-specific conditions still require review.

For an asset sale or other change in the person responsible for the action, section 145B allows the holder to transfer the approval by written agreement, subject to the Minister’s consent. The transfer has no effect for the purposes of the Act until the Minister consents in writing. The Minister’s current delegation to the National EPA, listed in the register of EPBC delegations, covers that consent. In deciding whether to consent, the Minister may consider whether the buyer would be a suitable holder, having regard to its history in relation to environmental matters (for a company, also that of its executive officers and any parent body), and whether it can comply with the conditions.

Only the current holder can ask for a transfer. The guidance says an approval cannot be transferred once its holder no longer exists as a legal entity; a buyer who then wants to carry out the project must lodge a new referral. Make the transfer effective before the buyer starts the approved action in its own capacity, and before the seller is wound up or deregistered.

A further change is pending. Schedule 1, item 246 of the Environment Protection Reform Act 2025 (Cth) will insert section 145B(3A). Once it takes effect, the protected-matter requirements in sections 137 to 140 (other than section 139(2)), which govern a decision to approve an action, will also apply to a decision whether to consent to a transfer. As at 30 September 2026 the item had not commenced. It will commence on a day fixed by proclamation or, at the latest, on 1 December 2026. It will then apply to transfer decisions made on or after the day it commences, or any different application day the Minister sets by notifiable instrument, including for approvals given earlier. A transfer timetable that runs past its commencement should allow for it.

Do not assume the vendor will volunteer every risk

In 191 Bells Pty Ltd v WJ & HL Crittle Pty Ltd [2024] NSWCA 221, Ward P held at [125] that the contractual words before the Court did not impose “an obligation of voluntary disclosure of anything that might be relevant” to due diligence. Payne JA and Stern JA agreed: [185]–[186]. The appeal was dismissed. The holding was contract- and fact-specific, and is not a licence to mislead; it is a warning against replacing precise requisitions, searches, inspections and warranties with an assumed disclosure obligation.

Ask direct questions, define the disclosure standard, preserve access for intrusive work where needed, and test answers against source records.

Tax advice and completion planning

Transaction structure can also change the tax and duty position. Stone & Pillar Legal does not provide tax advice: obtain advice from a registered tax agent or other qualified tax adviser on the actual structure before it is fixed.

For each statutory instrument, the completion schedule should identify its holder, regulated land or activity and expiry; the applicable continuity or transfer rule; every consent, notification or registration required; responsibility and timing for that step; interim operating restrictions; and the consequence if approval is refused or delayed. Contractual allocation of residual cost does not bind the regulator.

The deal structure is only the first filter. The decisive work is mapping each instrument to the legal person, land or activity it regulates, and making every non-automatic transfer a real completion dependency.

The Planning and environment due-diligence Navigator can be used to generate a transaction-specific operational checklist.