Buy Sell Agreement for India

Buy Sell Agreement Template for India

A comprehensive legal agreement governed by Indian law that establishes the terms and conditions for the purchase and sale of business interests, typically shares or assets, between stakeholders. This document is structured in accordance with Indian corporate and contract law, incorporating provisions from the Companies Act 2013, Indian Contract Act 1872, and other relevant legislation. It outlines the triggering events for sales, valuation methodologies, payment terms, and the process for executing the transfer, while ensuring compliance with Indian regulatory requirements including necessary corporate approvals and statutory filings.

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What is a Buy Sell Agreement?

The Buy-Sell Agreement serves as a crucial legal instrument in Indian business operations, particularly for closely-held companies, partnerships, and family businesses. It provides a structured framework for handling ownership transitions triggered by various events such as retirement, death, disability, or voluntary sale. This document, governed by Indian law, typically includes detailed provisions for valuation methods, payment terms, transfer procedures, and dispute resolution mechanisms. The agreement helps prevent potential conflicts by establishing clear protocols for ownership changes while ensuring compliance with Indian corporate law, securities regulations, and tax requirements. It's particularly valuable for business continuity planning and protecting the interests of both existing and departing stakeholders.

What sections should be included in a Buy Sell Agreement?

1. Parties: Identifies and defines all parties to the agreement, including their legal status and contact details

2. Background: Provides context for the agreement, including the current ownership structure and reason for the buy-sell arrangement

3. Definitions and Interpretation: Defines key terms used throughout the agreement and establishes rules of interpretation

4. Purchase and Sale Obligation: Core provision detailing the commitment to buy and sell, including trigger events and conditions

5. Valuation Mechanism: Specifies how the purchase price will be determined, including valuation methods and timelines

6. Payment Terms: Details the payment structure, timing, and method of payment

7. Closing Process: Outlines the procedure for completing the transaction, including conditions precedent and closing requirements

8. Representations and Warranties: States the assurances and declarations made by each party regarding their capacity and authority

9. Covenants: Lists ongoing obligations of the parties before and after closing

10. Default and Remedies: Specifies what constitutes default and the available remedies

11. Dispute Resolution: Details the process for resolving disputes, including jurisdiction and governing law

12. Miscellaneous: Contains standard boilerplate provisions including notices, amendments, and severability

What sections are optional to include in a Buy Sell Agreement?

1. Right of First Refusal: Optional section for when parties want to restrict transfer to third parties by giving existing owners first right to purchase

2. Tag-Along Rights: Optional provision allowing minority shareholders to join in the sale of shares to a third party

3. Drag-Along Rights: Optional provision allowing majority shareholders to force minority shareholders to join in the sale

4. Insurance Requirements: Optional section specifying requirements for life or disability insurance to fund the purchase

5. Non-Compete Provisions: Optional restrictions on competitive activities after the sale

6. Interim Management: Optional provisions governing management of the business during the transition period

7. Employee Matters: Optional section dealing with employment contracts and employee rights post-transaction

8. Intellectual Property Rights: Optional detailed provisions regarding the transfer of IP rights

9. Tax Matters: Optional detailed provisions regarding tax implications and responsibilities

What schedules should be included in a Buy Sell Agreement?

1. Schedule A - Description of Assets/Shares: Detailed list and description of the assets or shares being transferred

2. Schedule B - Purchase Price Calculation: Detailed methodology for calculating the purchase price

3. Schedule C - Encumbrances: List of all existing liens, charges, and encumbrances on the assets/shares

4. Schedule D - Required Consents: List of third-party consents required for the transfer

5. Schedule E - Intellectual Property: Detailed list of all IP rights included in the transfer

6. Appendix 1 - Valuation Report: Independent valuation report if required

7. Appendix 2 - Due Diligence Report: Summary of due diligence findings

8. Appendix 3 - Closing Checklist: List of all documents and actions required for closing

9. Appendix 4 - Form of Transfer Instruments: Templates for share transfer forms or asset transfer deeds

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

Jurisdiction

India

Publisher

Genie AI

Document Type

Agreement Contract

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Manufacturing

Information Technology

Professional Services

Real Estate

Retail

Healthcare

Family Business

Construction

Hospitality

Financial Services

Agriculture

Education

Logistics

Media and Entertainment

Relevant Teams

Legal

Finance

Corporate Secretarial

Compliance

Risk Management

Corporate Strategy

Business Development

Board of Directors

Executive Leadership

Investment

Mergers and Acquisitions

Relevant Roles

Chief Executive Officer

Managing Director

Company Secretary

Chief Financial Officer

Legal Counsel

Business Owner

Managing Partner

Board Director

Corporate Lawyer

Financial Controller

Investment Manager

Risk Manager

Compliance Officer

Business Development Manager

Corporate Strategy Director

Industries
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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