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Stock Purchase Contract

Stock Purchase Contract Template for India

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Key Requirements PROMPT example:

Stock Purchase Contract

"I need a Stock Purchase Contract for the sale of 25% shareholding in my private limited IT company to a domestic buyer, with completion scheduled for March 2025 and payment to be made in three installments."

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Document background
The Stock Purchase Contract serves as a fundamental legal instrument in Indian corporate transactions, essential for documenting share transfers between parties. It is primarily used when shareholders wish to sell their shareholding in a company, whether partially or entirely, to new or existing shareholders. The document must comply with Indian legal requirements, including the Companies Act, 2013, Securities Contracts (Regulation) Act, 1956, and relevant SEBI regulations for listed companies. It typically includes detailed provisions about the transaction structure, purchase price mechanisms, representations and warranties, and completion procedures. The agreement is crucial for both private and public companies, requiring careful consideration of regulatory compliance, tax implications, and corporate governance aspects under Indian law.
Suggested Sections

1. Parties: Identification of the seller(s) and purchaser(s) with complete details including registration information

2. Background: Context of the transaction, including brief description of the company whose shares are being transferred

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

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

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

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

7. Completion: Process and requirements for closing the transaction

8. Seller's Representations and Warranties: Statements of fact and assurances from the seller regarding the shares and company

9. Purchaser's Representations and Warranties: Statements of fact and assurances from the purchaser regarding capacity and authority

10. Covenants: Ongoing obligations of the parties

11. Indemnification: Protection mechanisms for breach of warranties or representations

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

13. Notices: Process and addresses for formal communications between parties

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 sell their shares alongside majority shareholders

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

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

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

5. Foreign Investment Compliance: Include when transaction involves foreign investors

6. Board Composition: Include when transaction affects company management rights

7. Regulatory Approval: Include when transaction requires specific regulatory clearances

8. Tax Matters: Include detailed tax provisions when complex tax implications exist

Suggested Schedules

1. Share Details: Details of shares being transferred including share certificate numbers and distinctive numbers

2. Company Information: Detailed information about the company including financial statements and corporate structure

3. Warranties: Detailed list of warranties given by the seller

4. Encumbrances: List of any existing encumbrances on the shares

5. Required Consents: List of third-party consents required for the transaction

6. Completion Checklist: List of documents and actions required for completion

7. Disclosure Schedule: Exceptions and qualifications to the warranties

8. Corporate Authorizations: Copies of relevant board and shareholder resolutions

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
Business Day
Board
Closing
Closing Date
Company
Completion
Conditions Precedent
Confidential Information
Consideration
Disclosed
Disclosure Schedule
Effective Date
Encumbrance
Event of Default
FEMA
Financial Statements
Financial Year
Governmental Authority
Group Companies
INR
Intellectual Property Rights
Law
Losses
Material Adverse Effect
Material Contracts
Ordinary Course of Business
Parties
Person
Purchase Price
Purchaser
RBI
Related Party
Relevant Shares
Representations and Warranties
ROC
Sale Shares
SEBI
Seller
Share Capital
Shareholders
Stamp Duty
Subsidiary
Tax
Third Party
Transaction
Transaction Documents
Transfer
Clauses
Interpretation
Share Purchase
Purchase Price
Payment Terms
Conditions Precedent
Completion
Completion Obligations
Seller Warranties
Purchaser Warranties
Pre-Completion Covenants
Post-Completion Covenants
Non-Competition
Non-Solicitation
Confidentiality
Indemnification
Tax Matters
Regulatory Compliance
Transfer Restrictions
Tag-Along Rights
Drag-Along Rights
Board Composition
Voting Rights
Dividend Rights
Information Rights
Exit Rights
Default
Force Majeure
Termination
Dispute Resolution
Governing Law
Jurisdiction
Notices
Assignment
Amendments
Severability
Entire Agreement
Counterparts
Costs and Expenses
Further Assurance
Third Party Rights
Relevant Industries

Financial Services

Technology

Manufacturing

Real Estate

Healthcare

Retail

Energy

Telecommunications

Infrastructure

Professional Services

Media and Entertainment

Agriculture

Education

Transportation and Logistics

Mining and Materials

Relevant Teams

Legal

Finance

Corporate Secretarial

Compliance

Tax

Risk Management

Corporate Development

Mergers & Acquisitions

Business Development

Executive Leadership

Corporate Governance

Investor Relations

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Company Secretary

Legal Counsel

Corporate Lawyer

Investment Banker

Financial Controller

Compliance Officer

Business Development Director

Mergers & Acquisitions Manager

Corporate Finance Manager

Due Diligence Specialist

Tax Manager

Risk Management Officer

Board Director

Managing Director

Shareholder Relations Manager

Industries
Companies Act, 2013: Primary legislation governing company operations in India, including share transfers, corporate governance, and shareholder rights
Securities Contracts (Regulation) Act, 1956: Regulates securities trading and stock exchanges in India, defining legal framework for stock transactions
SEBI Act, 1992: Establishes SEBI's authority and provides framework for protecting investor interests and regulating securities market
Indian Contract Act, 1872: Fundamental law governing contract formation and enforcement in India, including essential elements of valid contracts
Indian Stamp Act, 1899: Governs stamp duty requirements for share transfer documents and agreements
Income Tax Act, 1961: Covers tax implications of share transfers, including capital gains tax and reporting requirements
Foreign Exchange Management Act (FEMA), 1999: Regulates foreign investment in Indian shares and cross-border transactions if applicable
Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011: Regulates substantial acquisition of shares and takeovers, including disclosure requirements
Prevention of Money Laundering Act, 2002: Ensures compliance with anti-money laundering regulations in financial transactions
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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