Entrusted Shareholding Agreement Template for India

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Key Requirements PROMPT example:

Entrusted Shareholding Agreement

"I need an Entrusted Shareholding Agreement for a family business arrangement where my brother will act as nominee shareholder for my 25% shareholding in our technology company based in Mumbai, with the arrangement to commence from March 2025."

Document background
An Entrusted Shareholding Agreement is commonly used in India when direct ownership of shares needs to be structured through a nominee arrangement, whether for strategic, regulatory, or practical purposes. This document is essential in situations where beneficial ownership needs to be separated from legal ownership, such as in family businesses, cross-border investments, or complex corporate structures. The agreement ensures compliance with Indian corporate law, securities regulations, and trust law while protecting the interests of both the beneficial owner and the nominee shareholder. It typically includes comprehensive provisions for share management, voting rights, dividend handling, and eventual transfer mechanisms, along with necessary regulatory compliance measures.
Suggested Sections

1. Parties: Details of the entrusting shareholder (beneficial owner) and the nominee shareholder

2. Background: Context of the arrangement and relationship between parties

3. Definitions: Key terms used throughout the agreement

4. Scope of Entrustment: Details of shares being entrusted, including quantity, class, and company details

5. Declaration of Trust: Formal declaration of the nominee holding shares in trust for the beneficial owner

6. Rights and Obligations of the Nominee: Detailed responsibilities of the nominee shareholder including voting, dividend collection, and record-keeping

7. Rights and Obligations of the Beneficial Owner: Powers retained by the beneficial owner and their ongoing obligations

8. Consideration and Expenses: Any fees or expense arrangements between the parties

9. Representations and Warranties: Standard and specific warranties from both parties

10. Term and Termination: Duration of the agreement and circumstances for termination

11. Share Transfer Mechanism: Process for transferring shares back to beneficial owner or their nominee

12. Confidentiality: Provisions for maintaining confidentiality of the arrangement

13. Indemnification: Mutual indemnification provisions

14. Governing Law and Jurisdiction: Applicable law and courts having jurisdiction

15. Dispute Resolution: Process for resolving disputes between parties

Optional Sections

1. Foreign Exchange Compliance: Required when any party is non-resident or foreign exchange regulations apply

2. Multiple Beneficial Owners: Required when shares are held for multiple beneficial owners

3. Voting Arrangements: Detailed voting procedures when specific voting arrangements are required

4. Dividend Distribution Mechanism: Specific arrangements for handling and distributing dividends

5. Change in Law Provisions: Mechanisms to handle regulatory changes affecting the arrangement

6. Step-in Rights: Rights of beneficial owner to replace nominee in specific circumstances

7. Anti-dilution Provisions: Protection mechanisms for beneficial owner in case of corporate actions

Suggested Schedules

1. Schedule 1 - Share Details: Detailed description of shares including certificate numbers, distinctive numbers, and class of shares

2. Schedule 2 - Company Information: Details of the company whose shares are being entrusted

3. Schedule 3 - Initial Resolutions: Format of board/shareholder resolutions required to implement the arrangement

4. Schedule 4 - Transfer Forms: Pro-forma share transfer forms for future use

5. Schedule 5 - Power of Attorney: Format of power of attorney if required for the arrangement

6. Schedule 6 - Deed of Adherence: Format for adding new parties to the agreement if required

7. Appendix A - Communication Protocols: Agreed procedures for communications between parties

8. Appendix B - Regulatory Compliance Checklist: List of compliance requirements and documentation

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

Relevant legal definitions
Clauses
Relevant Industries

Financial Services

Banking

Investment Management

Real Estate

Technology

Manufacturing

Retail

Healthcare

Infrastructure

Mining

Telecommunications

Media and Entertainment

Relevant Teams

Legal

Compliance

Corporate Secretarial

Finance

Risk Management

Corporate Governance

Investment

Board Secretariat

Relevant Roles

Legal Counsel

Company Secretary

Compliance Officer

Corporate Lawyer

Investment Manager

Chief Financial Officer

Chief Legal Officer

Board Director

Managing Director

Shareholder Relations Manager

Risk Management Officer

Corporate Governance Officer

Industries
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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