The Promissory Note For Shares is commonly used in Indian business transactions where share transfers occur with deferred payment arrangements. This document is essential when parties wish to formalize a share purchase with future payment terms, providing legal security to both the seller and buyer. It combines elements of a standard promissory note under the Negotiable Instruments Act, 1881, with share transfer requirements under the Companies Act, 2013. The document is particularly useful in private company transactions, startup investments, and corporate restructuring where immediate payment for shares is not feasible or desired. It must include specific details about the shares, payment terms, and comply with both central and state-specific stamp duty requirements. The document's enforceability is supported by Indian contract law and securities regulations, making it a crucial instrument in share transfer transactions with deferred payment arrangements.
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1. Date and Place of Execution: Specifies when and where the promissory note is executed, which is crucial for legal validity
2. Parties: Identifies the maker (promisor) and the payee (promisee) with full legal names and addresses
3. Promise to Pay: Clear and unconditional promise to pay a specific sum for the shares
4. Share Details: Specific details of the shares being transferred including company name, number of shares, class of shares, and distinctive numbers
5. Payment Terms: Details of the payment amount, due date, and method of payment
6. Interest Rate: Specifies the rate of interest if applicable
7. Place of Payment: Designates where the payment should be made
8. Signature Block: Space for signatures of the maker and witness with proper attestation
1. Security Provisions: Include when additional security or collateral is being provided for the promise
2. Default and Consequences: Detailed terms about what constitutes default and its consequences, recommended for higher-value transactions
3. Acceleration Clause: Include when early payment provisions or triggers for immediate payment are needed
4. Transfer Restrictions: Include when there are specific restrictions on transferring the promissory note
5. Governing Law and Jurisdiction: Include when parties are from different jurisdictions or specific court jurisdiction needs to be established
6. Notice Provisions: Include when formal communication procedures need to be established between parties
1. Schedule A - Share Certificate Details: Detailed information about the share certificates including certificate numbers, folio numbers, and distinctive numbers
2. Schedule B - Payment Schedule: If payment is to be made in installments, detailed breakdown of payment dates and amounts
3. Schedule C - Company Information: Detailed information about the company whose shares are being transferred
4. Appendix 1 - Share Transfer Form: Standard form for share transfer as per Companies Act requirements
5. Appendix 2 - Board Resolution: Copy of board resolution approving the share transfer, if required
Relevant legal definitions
Agreement
Business Day
Company
Default Event
Due Date
Effective Date
Encumbrance
Interest Rate
Maker
Maturity Date
Outstanding Amount
Payee
Payment Date
Principal Amount
Promise to Pay
Promissory Note
Relevant Jurisdiction
Share Certificate
Shares
Share Transfer
Stamp Duty
Transfer Date
Transfer Form
Witnesses
Working Day
Business Day
Company
Default Event
Due Date
Effective Date
Encumbrance
Interest Rate
Maker
Maturity Date
Outstanding Amount
Payee
Payment Date
Principal Amount
Promise to Pay
Promissory Note
Relevant Jurisdiction
Share Certificate
Shares
Share Transfer
Stamp Duty
Transfer Date
Transfer Form
Witnesses
Working Day
Clauses
Promise to Pay
Share Details
Payment Terms
Interest
Default
Acceleration
Security
Representations and Warranties
Share Transfer
Notice Requirements
Enforcement
Governing Law
Jurisdiction
Stamp Duty Compliance
Assignment
Amendment
Attestation
Severability
Entire Agreement
Force Majeure
Indemnification
Dispute Resolution
Transferability
Notices
Registration
Share Details
Payment Terms
Interest
Default
Acceleration
Security
Representations and Warranties
Share Transfer
Notice Requirements
Enforcement
Governing Law
Jurisdiction
Stamp Duty Compliance
Assignment
Amendment
Attestation
Severability
Entire Agreement
Force Majeure
Indemnification
Dispute Resolution
Transferability
Notices
Registration
Relevant Industries
Financial Services
Banking
Investment Banking
Corporate Services
Legal Services
Private Equity
Venture Capital
Professional Services
Technology
Manufacturing
Real Estate
Retail
Healthcare
Education
Relevant Teams
Legal
Finance
Corporate Secretarial
Compliance
Investment
Corporate Finance
Treasury
Risk Management
Share Registry
Relevant Roles
Company Secretary
Legal Counsel
Corporate Lawyer
Investment Banker
Chief Financial Officer
Financial Controller
Compliance Officer
Managing Director
Director of Finance
Investment Manager
Private Equity Manager
Venture Capital Associate
Corporate Finance Manager
Share Transfer Agent
Legal Manager
Transaction Advisory Manager
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