The Letter Of Intent Share Purchase Agreement is a crucial preliminary document used in Indian corporate transactions when one party intends to purchase shares in a company. It serves as a roadmap for the transaction, documenting the parties' initial understanding while maintaining flexibility for detailed negotiations. This document is typically used after initial discussions but before detailed due diligence and final agreement stages. It includes essential terms such as the proposed purchase price, number of shares, exclusivity period, and key conditions, while clearly stating which provisions are binding and non-binding. Under Indian law, particularly considering the Companies Act, 2013 and relevant SEBI regulations, this document helps establish serious intent while protecting both parties during the negotiation phase. It's particularly important in complex transactions where detailed due diligence and regulatory approvals are required before finalizing the share purchase.
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1. Date and Parties: Opening of letter identifying the sender and recipient parties with full legal names and addresses
2. Subject Line: Clear identification that this is a Letter of Intent for Share Purchase
3. Introduction: Brief opening paragraph establishing the context and purpose of the letter
4. Transaction Overview: High-level description of the proposed share purchase transaction
5. Key Terms: Essential terms including number of shares, price per share, and total consideration
6. Due Diligence: Outline of the proposed due diligence process and timeline
7. Timeline: Proposed schedule for completing the transaction
8. Exclusivity: Terms of exclusive negotiation period if applicable
9. Confidentiality: Reference to or inclusion of confidentiality obligations
10. Closing Conditions: Key conditions that must be satisfied to proceed with the final transaction
11. Non-Binding Nature: Clear statement about which provisions are non-binding versus binding
12. Signature Block: Space for signatures of authorized representatives of both parties
1. Break Fee: Include when parties want to specify fees payable if either party backs out under certain circumstances
2. Financing Contingency: Include when the purchase is contingent on the buyer securing specific financing
3. Management Continuity: Include when there are specific expectations about current management staying on
4. Employee Matters: Include when there are preliminary agreements about treatment of employees
5. Regulatory Approvals: Include when the transaction will require specific regulatory clearances
6. Governing Law: Include when parties want to specify the governing law for the LOI itself
7. Dispute Resolution: Include when parties want to specify how disputes relating to the LOI will be handled
1. Appendix A - Target Shares Details: Details of the shares being considered for purchase including class, rights, and current ownership
2. Appendix B - Indicative Timeline: Detailed timeline with key milestones and deadlines for the proposed transaction
3. Appendix C - Due Diligence Checklist: Preliminary list of documents and information required for due diligence
4. Appendix D - Term Sheet: Detailed term sheet outlining the key commercial terms of the proposed transaction
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