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Stock Investment Agreement

Stock Investment Agreement Template for India

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Key Requirements PROMPT example:

Stock Investment Agreement

"I need a Stock Investment Agreement for a domestic Indian tech startup receiving INR 5 crore investment from a Mumbai-based venture capital fund, with completion planned for March 2025 and standard minority protection rights."

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Document background
The Stock Investment Agreement serves as a crucial legal instrument in Indian corporate transactions, documenting the terms under which an investor acquires shares in a company. This agreement is essential when companies seek equity funding, whether from institutional investors, venture capital funds, or individual investors. It must comply with Indian regulatory requirements, including the Companies Act 2013, SEBI regulations, and where applicable, foreign investment rules. The document typically covers investment terms, shareholder rights, corporate governance provisions, exit mechanisms, and protective provisions. Used primarily in private equity transactions, venture capital investments, and strategic investments, the Stock Investment Agreement protects both investor interests and company objectives while ensuring regulatory compliance.
Suggested Sections

1. Parties: Identification of the Company, Investor(s), and existing shareholders

2. Background: Context of the investment, company's business, and purpose of the agreement

3. Definitions: Definitions of key terms used throughout the agreement

4. Investment Terms: Details of investment amount, number of shares, price per share, and payment terms

5. Conditions Precedent: Conditions that must be satisfied before investment completion

6. Completion: Steps to be taken at closing of the investment

7. Representations and Warranties: Statements of fact and assurances by the company and existing shareholders

8. Investor Rights: Rights granted to the investor including board seat, veto rights, information rights

9. Transfer Restrictions: Limitations on transfer of shares including lock-in, right of first refusal

10. Exit Rights: Provisions for investor exit including put option, drag-along, tag-along rights

11. Covenants: Ongoing obligations of the company and existing shareholders

12. Confidentiality: Provisions regarding confidential information

13. Term and Termination: Duration of agreement and circumstances for termination

14. Governing Law and Dispute Resolution: Applicable law and method of resolving disputes

15. Miscellaneous: Standard boilerplate provisions including notices, amendments, severability

Optional Sections

1. Anti-dilution Rights: Protection against dilution of investor's shareholding, used when investing in early-stage companies

2. Liquidation Preference: Priority rights in case of liquidation, typically included for significant investments

3. Founder Obligations: Specific commitments from founders including non-compete, used when founders are key to business

4. Corporate Governance: Detailed governance framework, important for larger investments or regulated sectors

5. Employee Stock Options: Provisions regarding ESOP pool and administration, relevant if company has/plans ESOP

6. Strategic Rights: Special rights for strategic investors, used for industry-specific investments

7. Foreign Investment Compliance: Special provisions for foreign investors, required when investor is non-Indian

Suggested Schedules

1. Schedule 1 - Company Information: Details of company including capital structure, subsidiaries, material contracts

2. Schedule 2 - Shareholding Pattern: Pre and post-investment shareholding structure

3. Schedule 3 - Conditions Precedent: Detailed list of conditions to be satisfied before completion

4. Schedule 4 - Warranties: Detailed warranties given by company and existing shareholders

5. Schedule 5 - Reserved Matters: List of matters requiring investor consent

6. Schedule 6 - Completion Steps: Detailed steps to be taken at completion

7. Appendix A - Board Resolution: Format of board resolution approving investment

8. Appendix B - Shareholders' Resolution: Format of shareholders' resolution approving investment

9. Appendix C - Share Certificate: Format of share certificate to be issued

10. Appendix D - Disclosure Letter: Exceptions to warranties and representations

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
Anti-dilution Rights
Applicable Law
Articles of Association
Board
Business Day
Business Plan
Closing
Closing Date
Companies Act
Company
Completion
Conditions Precedent
Confidential Information
Consideration
Control
Deed of Adherence
Directors
Disclosure Letter
Drag-Along Rights
Encumbrance
Equity Shares
Event of Default
Exit Event
Financial Year
Fully Diluted Basis
Government Authority
Group Company
Holding Company
Investment Amount
Investor
IPO
Key Employees
Lock-in Period
Material Adverse Effect
Memorandum of Association
New Securities
Parties
Pre-emptive Rights
Promoters
Put Option
Qualified IPO
Reserved Matters
Right of First Refusal
SEBI
Shareholders
Shareholders' Agreement
Subscription Shares
Subsidiary
Tag-Along Rights
Transfer
Valuation
Warranties
Clauses
Share Subscription
Investment Terms
Payment Terms
Conditions Precedent
Completion Obligations
Representations and Warranties
Board Composition
Reserved Matters
Information Rights
Pre-emptive Rights
Transfer Restrictions
Tag-Along Rights
Drag-Along Rights
Anti-dilution
Exit Rights
Put Option
Call Option
Non-Compete
Non-Solicitation
Confidentiality
Intellectual Property
Corporate Governance
Dividend Rights
Liquidation Preference
Events of Default
Indemnification
Force Majeure
Dispute Resolution
Governing Law
Termination
Assignment
Notices
Amendment
Severability
Entire Agreement
Costs and Expenses
Relevant Industries

Technology

Manufacturing

Healthcare

Financial Services

E-commerce

Real Estate

Infrastructure

Telecommunications

Consumer Goods

Education

Renewable Energy

Biotechnology

Agriculture

Media and Entertainment

Retail

Relevant Teams

Legal

Finance

Corporate Development

Compliance

Investment

Corporate Secretarial

Risk Management

Executive Leadership

Board of Directors

Mergers and Acquisitions

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Investment Manager

Legal Counsel

Company Secretary

Corporate Lawyer

Investment Banker

Managing Director

Finance Director

Compliance Officer

Private Equity Manager

Venture Capital Associate

Board Director

Risk Manager

Corporate Development Manager

Industries
Companies Act, 2013: Primary legislation governing company operations in India, including share issuance, transfer procedures, and shareholder rights
Securities and Exchange Board of India Act, 1992: Regulates securities markets and protects investor interests, including disclosure requirements and trading regulations
Indian Contract Act, 1872: Fundamental law governing contract formation, validity, and enforcement in India
Foreign Exchange Management Act (FEMA), 1999: Regulates foreign investment in Indian companies and cross-border transactions
Income Tax Act, 1961: Governs taxation aspects of share transfers, capital gains, and investment-related income
SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011: Regulates substantial acquisition of shares and takeovers of listed companies
Prevention of Money Laundering Act, 2002: Ensures compliance with anti-money laundering provisions in financial transactions
Securities Contracts (Regulation) Act, 1956: Regulates securities trading and stock exchanges in India
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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