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Share Purchase Agreement Between Shareholders

Share Purchase Agreement Between Shareholders Template for India

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Key Requirements PROMPT example:

Share Purchase Agreement Between Shareholders

"I need a Share Purchase Agreement Between Shareholders for transferring 15% shareholding from a retiring director to an existing shareholder in our private limited technology company, with completion scheduled for March 2025 and payment to be made in two equal installments."

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Document background
The Share Purchase Agreement Between Shareholders is a crucial document used when existing shareholders of a company wish to transfer their shareholding to other shareholders under Indian law. This agreement is essential for both private and public companies, though additional regulatory requirements apply for listed entities. The document becomes necessary when shareholders decide to exit partially or completely, restructure their holdings, or consolidate ownership within the existing shareholder group. It includes comprehensive details about the share transfer, including valuation, payment terms, representations, warranties, and indemnities. The agreement ensures compliance with the Companies Act, 2013, SEBI regulations (where applicable), and other relevant Indian legislation. It also addresses tax implications, stamp duty requirements, and necessary corporate approvals. The document serves as evidence of the transaction and protects the interests of all parties by clearly defining their rights and obligations.
Suggested Sections

1. Parties: Identification of the seller(s) and buyer(s) with complete details as required under Indian law

2. Background: Context of the transaction, information about the company whose shares are being transferred, and current shareholding structure

3. Definitions and Interpretation: Definitions of key terms used in the agreement and rules of interpretation

4. Sale and Purchase of Shares: Core transaction terms including number of shares, class of shares, and price per share

5. Purchase Price and Payment Terms: Detailed breakdown of consideration, payment method, and timing

6. Conditions Precedent: Conditions that must be satisfied before completion of the transfer

7. Completion: Process and mechanics of closing the transaction, including timing and location

8. Seller's Warranties: Representations and warranties from the seller regarding ownership, authority, and share status

9. Buyer's Warranties: Representations and warranties from the buyer regarding authority and ability to complete purchase

10. Tax Matters: Allocation of tax liabilities and responsibilities between parties

11. Confidentiality: Obligations regarding confidential information and announcements

12. Notices: Process and requirements for formal communications between parties

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

14. General Provisions: Standard boilerplate clauses including severability, entire agreement, and amendments

Optional Sections

1. Tag-Along Rights: Include when minority shareholders need protection to participate in share sales

2. Drag-Along Rights: Include when majority shareholders need the right to force minority shareholders to join in a sale

3. Non-Compete and Non-Solicitation: Include when seller is required to restrict future business activities

4. FEMA Compliance: Include when transaction involves foreign buyers or sellers

5. Regulatory Approvals: Include for listed companies or when specific regulatory clearances are needed

6. Earn-out Provisions: Include when part of purchase price is contingent on future performance

7. Break Fee: Include when parties want to specify damages for failing to complete the transaction

8. Employee Matters: Include when transaction affects key employees or employment agreements

Suggested Schedules

1. Schedule 1 - Share Details: Detailed description of shares being transferred including share certificate numbers and distinctive numbers

2. Schedule 2 - Company Information: Details of the company including corporate information, licenses, and material contracts

3. Schedule 3 - Warranties: Comprehensive list of warranties given by the seller

4. Schedule 4 - Completion Requirements: Detailed list of documents and actions required at completion

5. Schedule 5 - Encumbrances: List of any existing encumbrances on the shares

6. Schedule 6 - Corporate Authorizations: Copies of required corporate authorizations and board resolutions

7. Schedule 7 - Disclosed Matters: Disclosures against the warranties

8. Appendix A - Form of Share Transfer Form: Template of share transfer form as per Companies Act requirements

9. Appendix B - Bank Account Details: Payment account details for transfer of purchase price

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
Clauses
Interpretation
Share Purchase
Purchase Price
Payment Terms
Conditions Precedent
Completion
Representations and Warranties
Seller Warranties
Buyer Warranties
Tax Covenants
Indemnification
Confidentiality
Non-Competition
Non-Solicitation
Further Assurance
Assignment
Notices
Force Majeure
Severability
Amendment
Entire Agreement
Costs and Expenses
Governing Law
Dispute Resolution
Tag-Along Rights
Drag-Along Rights
Board Representation
Pre-emptive Rights
Information Rights
Regulatory Compliance
Share Transfer Restrictions
Termination
Survival
Time of Essence
Stamp Duty
Power of Attorney
Waiver
Relevant Industries

Financial Services

Technology

Manufacturing

Real Estate

Healthcare

Retail

Energy

Transportation

Professional Services

Media and Entertainment

Telecommunications

Agriculture

Education

Construction

Mining

Relevant Teams

Legal

Finance

Compliance

Corporate Secretarial

Board of Directors

Corporate Governance

Risk Management

Investment

Shareholder Relations

Corporate Affairs

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Company Secretary

Legal Counsel

Corporate Lawyer

Investment Manager

Compliance Officer

Finance Director

Managing Director

Board Director

Shareholder Relations Manager

Corporate Governance Officer

Financial Controller

Business Development Director

Risk Manager

Industries
Companies Act, 2013: Primary legislation governing company operations, share transfers, and shareholder rights in India. Particularly relevant sections include Section 56 (transfer of shares) and Sections 236-238 (share transfer provisions).
Securities and Exchange Board of India Act, 1992: Regulates securities market and protects investor interests. Relevant for listed companies and compliance with disclosure requirements during share transfers.
Income Tax Act, 1961: Governs taxation aspects of share transfers, including capital gains tax implications and tax clearance certificates where applicable.
Indian Contract Act, 1872: Provides the basic framework for contract formation and enforcement, essential for the validity of the share purchase agreement.
Indian Stamp Act, 1899: Determines the stamp duty payable on share transfer documents and agreements.
Transfer of Property Act, 1882: Relevant for transfer of movable property (shares) and general principles of property transfer.
Foreign Exchange Management Act, 1999: Applicable if the transaction involves foreign shareholders or cross-border elements, regulating foreign investment in shares.
Securities Contracts (Regulation) Act, 1956: Regulates securities trading and stock exchanges, relevant for listed company shares and their transfer mechanisms.
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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