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Intercompany Recharge Agreement

Intercompany Recharge Agreement Template for India

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Key Requirements PROMPT example:

Intercompany Recharge Agreement

"Need to draft an Intercompany Recharge Agreement for our Indian IT shared services center to provide technology support services to five domestic group companies, with implementation planned for January 2025 and including specific provisions for data protection and service levels."

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Document background
The Intercompany Recharge Agreement is essential for corporate groups operating in India who need to establish a formal framework for sharing costs and services between related entities. This document is particularly crucial given India's strict transfer pricing regulations and corporate law requirements for related party transactions. It becomes necessary when group companies share services, facilities, or resources and need to implement a systematic charging mechanism. The agreement ensures compliance with Indian regulatory requirements including the Companies Act 2013, Income Tax Act (transfer pricing provisions), GST laws, and where applicable, FEMA regulations. It typically includes detailed charging methodologies, compliance procedures, and documentation requirements to satisfy regulatory scrutiny.
Suggested Sections

1. Parties: Identification of the group companies entering into the agreement

2. Background: Context of the agreement, relationship between the parties, and purpose of the recharge arrangement

3. Definitions: Key terms used throughout the agreement, including types of services, costs, and calculation methods

4. Scope of Services: Detailed description of services to be provided and recharged between the parties

5. Calculation of Charges: Methodology for calculating recharges, including cost allocation basis and markup

6. Payment Terms: Terms and conditions for payment, including currency, timing, and invoicing requirements

7. Tax and GST: Treatment of taxes, GST applicability, and withholding tax obligations

8. Record Keeping: Requirements for maintaining documentation to support the recharges and ensure compliance

9. Audit Rights: Rights of parties to audit the calculations and supporting documentation

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

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

Optional Sections

1. Transfer Pricing Compliance: Detailed section on transfer pricing compliance when significant international transactions are involved

2. Foreign Exchange Compliance: Additional provisions for cross-border transactions subject to FEMA regulations

3. Service Level Agreement: Specific service levels and performance metrics when quality standards are critical

4. Intellectual Property Rights: IP provisions when services involve creation or use of intellectual property

5. Data Protection: Provisions for handling sensitive data when services involve data processing or transfer

6. Force Majeure: Provisions for unforeseen circumstances affecting service delivery

7. Step-in Rights: Rights to step in and provide services directly in case of default, where critical services are involved

Suggested Schedules

1. Schedule 1 - Service Description: Detailed description of each service category covered under the agreement

2. Schedule 2 - Charging Methodology: Detailed calculation methods, allocation keys, and markup calculations

3. Schedule 3 - Cost Categories: List and description of cost categories included in the recharge arrangement

4. Schedule 4 - Service Levels: Specific service levels and performance metrics if applicable

5. Schedule 5 - Contact Details: Key contacts for operational, financial, and administrative matters

6. Appendix A - Template Invoice: Standard format for invoices including required details

7. Appendix B - Regulatory Compliance Checklist: Checklist of compliance requirements under various applicable laws

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
Affiliate
Agreement
Arm's Length Principle
Associated Enterprise
Beneficial Owner
Business Day
Charges
Commencement Date
Confidential Information
Cost Base
Cost Pool
Direct Costs
Effective Date
Force Majeure Event
Group
Group Company
Indirect Costs
Interest Rate
Invoice
Key Performance Indicators
Management Services
Mark-up
Notice
Operating Costs
Parent Company
Party/Parties
Payment Date
Quarter
Recharge Basis
Recharge Period
Related Party
Service Level Standards
Service Provider
Service Recipient
Services
Shared Services
Subsidiary
Support Documentation
Tax
Term
Territory
Transfer Pricing
Working Hours
Clauses
Definitions and Interpretation
Services
Service Levels
Charges
Payment Terms
Transfer Pricing
Tax and GST
Regulatory Compliance
Record Keeping
Audit Rights
Confidentiality
Data Protection
Intellectual Property
Warranties
Indemnification
Force Majeure
Term and Termination
Assignment
Notices
Dispute Resolution
Governing Law and Jurisdiction
Entire Agreement
Severability
Variation
Waiver
Third Party Rights
Foreign Exchange Compliance
Anti-Corruption
Documentation Requirements
Service Provider Obligations
Service Recipient Obligations
Change Control
Performance Review
Cost Allocation
Markup Provisions
Reporting Requirements
Relevant Industries

Information Technology

Manufacturing

Financial Services

Pharmaceutical

Automotive

Consumer Goods

Professional Services

Energy and Utilities

Telecommunications

Real Estate and Construction

Relevant Teams

Legal

Finance

Tax

Treasury

Compliance

Company Secretarial

Internal Audit

Shared Services

Commercial

Accounts

Relevant Roles

Chief Financial Officer

Finance Director

Tax Director

Legal Counsel

Company Secretary

Transfer Pricing Manager

Financial Controller

Compliance Officer

Treasury Manager

Group Finance Manager

Shared Services Director

Commercial Director

Industries
Companies Act, 2013: Particularly sections 177, 188 and 189 dealing with related party transactions, board and audit committee approvals, and maintaining statutory registers of related party transactions
Income Tax Act, 1961 (Transfer Pricing Regulations): Sections 92-92F covering transfer pricing provisions, including the arm's length principle for related party transactions and documentation requirements
Foreign Exchange Management Act (FEMA), 1999: Regulates cross-border transactions and overseas payments between related entities, including pricing and remittance rules
Central Goods and Services Tax Act, 2017: Governs the GST implications on intercompany services and transactions, including valuation rules for related party transactions
Indian Contract Act, 1872: Basic contract law principles governing the formation and enforcement of agreements
Indian Accounting Standards (Ind AS 24): Provides guidelines for related party disclosures and accounting treatment of intercompany transactions
Prevention of Money Laundering Act, 2002: Ensures legitimate business purpose and proper documentation of intercompany transactions to prevent money laundering
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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