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Acquisition Non Compete Agreement

Acquisition Non Compete Agreement Template for India

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Key Requirements PROMPT example:

Acquisition Non Compete Agreement

"I need an Acquisition Non-Compete Agreement to restrict a technology company's selling shareholders from competing in the AI software development space across South India for 3 years following our acquisition closing in March 2025; the agreement should include specific provisions for protecting our intellectual property and customer relationships."

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Document background
The Acquisition Non-Compete Agreement is a crucial document in Indian M&A transactions, designed to protect the buyer's investment by preventing sellers and key stakeholders from competing with the acquired business. This document becomes essential when there's a risk that sellers or promoters might leverage their industry knowledge and relationships to compete with the acquired business. It must comply with Indian legal requirements, particularly Section 27 of the Indian Contract Act and competition laws, while implementing reasonable restrictions in terms of duration, geographical area, and scope. The agreement typically accompanies the main acquisition agreement and includes specific details about restricted activities, consideration for non-compete obligations, and enforcement mechanisms. It's particularly important in knowledge-intensive industries or where key relationships and goodwill are crucial to business success.
Suggested Sections

1. Parties: Identification of the parties entering into the agreement, including the seller/promoter and the buyer/acquirer

2. Background: Context of the acquisition transaction and rationale for the non-compete provisions

3. Definitions: Definitions of key terms including Restricted Business, Territory, Confidential Information, and other relevant terms

4. Scope of Non-Compete: Detailed description of prohibited activities and business areas covered by the non-compete

5. Duration and Territory: Specific time period and geographical boundaries of the non-compete restrictions

6. Non-Solicitation Obligations: Restrictions on soliciting employees, customers, and suppliers

7. Confidentiality Obligations: Obligations regarding protection and non-disclosure of confidential information

8. Consideration: Details of the consideration paid for the non-compete obligations

9. Representations and Warranties: Statements of fact and assurances from both parties

10. Remedies for Breach: Consequences and available remedies in case of violation

11. Governing Law and Jurisdiction: Specification of Indian law as governing law and jurisdiction for disputes

12. Notice Provisions: Process and requirements for serving notices under the agreement

13. Execution: Signature blocks and execution formalities

Optional Sections

1. Permitted Activities: Used when certain specific activities need to be carved out from the non-compete restrictions

2. Assignment: Include when transfer rights need to be specifically addressed

3. Step-in Rights: Required when buyer needs right to take over certain business relationships in case of breach

4. Severability: Important in jurisdictions where parts of the non-compete might be challenged

5. Independent Covenants: Used to ensure surviving obligations if main acquisition agreement is terminated

6. Monitoring and Compliance: Include when specific reporting or compliance mechanisms are needed

7. Non-Circumvention: Added when there's risk of indirect competition through related parties

Suggested Schedules

1. Schedule 1 - Restricted Business Definition: Detailed description of business activities covered by non-compete

2. Schedule 2 - Territory Map: Geographical representation of restricted territory

3. Schedule 3 - Existing Business Interests: List of existing business interests that are carved out from restrictions

4. Schedule 4 - Key Employees: List of key employees covered by non-solicitation provisions

5. Schedule 5 - Computation of Non-Compete Consideration: Breakdown of consideration amount and payment terms

6. Appendix A - Compliance Certificate Format: Template for periodic compliance certification if required

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Acquisition
Affiliate
Agreement
Business Day
Closing Date
Competing Business
Confidential Information
Control
Effective Date
Governmental Authority
Group
Intellectual Property Rights
Key Personnel
Non-Compete Period
Non-Compete Territory
Permitted Activities
Person
Prohibited Activities
Related Party
Restricted Business
Restricted Customers
Restricted Employees
Restricted Suppliers
Sellers
Subsidiary
Target Business
Target Company
Term
Territory
Trade Secrets
Transaction Documents
Relevant Industries

Technology

Manufacturing

Pharmaceuticals

Retail

E-commerce

Financial Services

Healthcare

Professional Services

Telecommunications

Real Estate

Consumer Goods

Industrial Products

Media and Entertainment

Energy and Infrastructure

Relevant Teams

Legal

Corporate Development

Mergers & Acquisitions

Finance

Compliance

Business Development

Executive Leadership

Strategy

Corporate Secretarial

Risk Management

Relevant Roles

Chief Executive Officer

Managing Director

Chief Legal Officer

General Counsel

Head of Mergers & Acquisitions

Corporate Development Director

Chief Financial Officer

Business Development Director

Company Secretary

Legal Counsel

Compliance Officer

Investment Director

Private Equity Partner

Venture Capital Partner

Transaction Advisory Partner

Corporate Lawyer

Industries
Indian Contract Act, 1872: Fundamental law governing contracts in India, particularly Section 27 which deals with restraint of trade and declares agreements in restraint of trade void, except for sale of goodwill
Competition Act, 2002: Regulates anti-competitive practices and ensures that business combinations don't cause appreciable adverse effect on competition. Relevant for non-compete clauses in acquisition agreements
Constitution of India - Article 19(1)(g): Guarantees fundamental right to practice any profession, carry on any occupation, trade or business. Non-compete must be reasonable and not violate this fundamental right
Companies Act, 2013: Governs corporate restructuring, mergers and acquisitions. Relevant for the overall transaction structure and compliance requirements
Specific Relief Act, 1963: Relevant for enforcement of non-compete agreements and available remedies in case of breach
Income Tax Act, 1961: Considerations for tax implications of non-compete payments and their treatment as capital gains or business income
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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