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Shareholder Withdrawal Agreement

Shareholder Withdrawal Agreement Template for India

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Key Requirements PROMPT example:

Shareholder Withdrawal Agreement

"I need a Shareholder Withdrawal Agreement for our tech startup in Bangalore, where one of our founding members is retiring and wants to sell their 15% shareholding back to the company with payments structured over 6 months starting March 2025."

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Document background
The Shareholder Withdrawal Agreement is a crucial document used when a shareholder wishes to exit their investment in an Indian company. This agreement becomes necessary in various scenarios, such as retirement of founding members, strategic exits, or resolution of shareholder disputes. It must comply with the Companies Act, 2013, Income Tax Act, and other relevant Indian legislation. The document typically includes comprehensive details about share valuation, payment structures, completion mechanics, and any post-exit obligations. It's particularly important for private companies where shares aren't freely transferable and requires careful consideration of the company's Articles of Association and any existing shareholder agreements.
Suggested Sections

1. Parties: Identification of the withdrawing shareholder(s), remaining shareholders, and the company

2. Background: Context of the agreement, including current shareholding structure and reason for withdrawal

3. Definitions: Key terms used throughout the agreement

4. Share Withdrawal Terms: Details of shares being withdrawn, including number, class, and timing

5. Valuation and Purchase Price: Agreed value of shares and method of valuation

6. Payment Terms: Structure and timing of payment for the withdrawn shares

7. Completion Requirements: Actions required to complete the withdrawal process

8. Representations and Warranties: Statements of fact by all parties regarding their capacity and authority

9. Confidentiality: Obligations regarding confidential information

10. Tax Matters: Treatment of tax implications and responsibilities

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

Optional Sections

1. Non-Compete Clause: Restrictions on the withdrawing shareholder's future business activities - used when protecting company interests is crucial

2. Continuing Obligations: Ongoing responsibilities of the withdrawing shareholder - relevant for directors or key personnel

3. Foreign Exchange Compliance: FEMA compliance details - required when foreign shareholders are involved

4. Drag-Along Rights: Rights of majority shareholders to force minority shareholders to join in the sale - useful in complex exit scenarios

5. Dispute Resolution: Alternative dispute resolution mechanisms - recommended for high-value withdrawals

Suggested Schedules

1. Share Certificate Details: Details of share certificates being transferred

2. Valuation Report: Independent valuation report or agreed valuation methodology

3. Payment Schedule: Detailed breakdown of payment installments if applicable

4. Existing Shareholder Agreement: Reference copy of the current shareholder agreement being modified

5. Board Resolution: Copy of board resolution approving the withdrawal

6. Regulatory Approvals: Copies of any required regulatory approvals or filings

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
Agreement
Articles of Association
Board
Business Day
Companies Act
Company
Completion
Completion Date
Confidential Information
Consideration
Deed of Adherence
Effective Date
Encumbrance
Existing Shareholders Agreement
Fair Market Value
Financial Year
Governmental Authority
Group
INR
Law
Losses
Material Adverse Effect
Parties
Purchase Price
Remaining Shareholders
Representative
RoC
Sale Shares
SEBI
Share Certificate
Shareholders
Shareholder Rights
Subsidiary
Tax
Transaction Documents
Transfer
Valuation Date
Valuation Report
Withdrawing Shareholder
Relevant Industries

Technology

Manufacturing

Financial Services

Professional Services

Real Estate

Healthcare

Retail

Infrastructure

Energy

Telecommunications

Media & Entertainment

Agriculture

Education

Relevant Teams

Legal

Finance

Corporate Secretarial

Compliance

Risk Management

Board Secretariat

Corporate Governance

Investor Relations

Treasury

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Company Secretary

Legal Counsel

Corporate Lawyer

Investment Manager

Finance Director

Board Director

Managing Director

Compliance Officer

Risk Manager

Corporate Governance Officer

Shareholder Relations Manager

Industries
Companies Act, 2013: Primary legislation governing company operations in India, including provisions for share transfers, shareholder rights, and corporate governance requirements
Income Tax Act, 1961: Deals with tax implications of share transfers, capital gains, and other financial aspects of shareholder withdrawal
Indian Contract Act, 1872: Provides the basic framework for all contractual agreements, including essential elements of a valid contract and remedies for breach
SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011: Relevant if the company is listed, governing substantial share transfers and disclosure requirements
Foreign Exchange Management Act (FEMA), 1999: Applicable if foreign shareholders are involved, governing cross-border transactions and foreign investment regulations
Articles of Association: Though not legislation, this company document is crucial as it contains specific provisions regarding share transfers and shareholder rights
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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