Stock Purchase Agreement for India

Stock Purchase Agreement Template for India

A comprehensive legal document governed by Indian law that formalizes the purchase and sale of shares in a company. This agreement outlines the terms and conditions of the share transfer, including purchase price, payment terms, representations and warranties, and closing conditions. It ensures compliance with Indian corporate laws, including the Companies Act 2013 and relevant SEBI regulations for listed companies. The agreement provides crucial protection for both buyers and sellers by clearly defining their rights, obligations, and remedies while addressing specific requirements under Indian jurisdiction regarding share transfers, stamp duty, and regulatory approvals.

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What is a Stock Purchase Agreement?

The Stock Purchase Agreement (SPA) is a crucial legal document used in Indian corporate transactions when transferring ownership of company shares from sellers to buyers. It is essential for both private and public company transactions, though requirements vary based on whether the company is listed. The agreement must comply with Indian corporate law, including the Companies Act 2013, SEBI regulations (for listed companies), and relevant tax laws. It typically includes detailed provisions about the transaction structure, representations and warranties, indemnities, and closing conditions. This document is particularly important in mergers and acquisitions, strategic investments, and corporate restructuring, providing a legally binding framework that protects all parties' interests while ensuring regulatory compliance. The SPA must be stamped in accordance with Indian stamp duty laws and may require various regulatory approvals depending on the transaction size and sector.

What sections should be included in a Stock Purchase Agreement?

1. Parties: Identification of the seller(s), purchaser(s), and the target company

2. Background: Context of the transaction and current ownership structure

3. Definitions and Interpretation: Definitions of key terms and interpretation rules

4. Sale and Purchase of Shares: Core transaction terms including number of shares, price, and payment terms

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

6. Pre-Completion Obligations: Parties' obligations between signing and completion

7. Completion: Mechanics of closing the transaction, including timing and deliverables

8. Seller's Representations and Warranties: Warranties regarding share ownership, authority to sell, and company status

9. Company Representations and Warranties: Warranties about the company's business, assets, and liabilities

10. Purchaser's Representations and Warranties: Warranties regarding authority to purchase and financial capacity

11. Indemnification: Provisions for compensation in case of breach of warranties or covenants

12. Confidentiality: Obligations regarding transaction and company information

13. Announcements: Rules for public statements about the transaction

14. Governing Law and Jurisdiction: Choice of Indian law and dispute resolution mechanisms

15. General Provisions: Standard boilerplate clauses including notices, amendments, and severability

What sections are optional to include in a Stock Purchase Agreement?

1. Tag-Along Rights: Used when minority shareholders need protection to sell their shares alongside majority shareholders

2. Drag-Along Rights: Included when majority shareholders want the right to force minority shareholders to join in a sale

3. Non-Competition: Added when sellers need to be restricted from competing post-sale

4. Regulatory Approvals: Required when the transaction needs specific regulatory clearances

5. Employee Matters: Included when there are specific arrangements regarding key employees

6. Tax Matters: Added when specific tax arrangements or indemnities are needed

7. Foreign Investment Compliance: Required for transactions involving foreign investors

8. Earn-out Provisions: Used when part of the purchase price is contingent on future performance

What schedules should be included in a Stock Purchase Agreement?

1. Details of the Shares: Complete description of shares being transferred including share certificate numbers

2. Company Information: Details of the target company including corporate information and capital structure

3. Warranties: Detailed warranties about the company and its business

4. Disclosure Schedule: Exceptions and qualifications to the warranties

5. Material Contracts: List and copies of important company contracts

6. Intellectual Property: Details of company's IP rights and registrations

7. Properties: List of company's real estate and leased properties

8. Employee Information: Details of key employees and benefit plans

9. Completion Deliverables: List of documents and actions required at completion

10. Form of Share Transfer Deed: Template for executing the share transfer

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

Technology

Manufacturing

Financial Services

Healthcare

Real Estate

Retail

Energy

Infrastructure

Telecommunications

Professional Services

Education

Media and Entertainment

Pharmaceuticals

Automotive

Agriculture

Relevant Teams

Legal

Finance

Corporate Development

Mergers & Acquisitions

Compliance

Executive Leadership

Corporate Secretarial

Investment

Business Development

Risk Management

Relevant Roles

Chief Executive Officer

Chief Financial Officer

General Counsel

Corporate Lawyer

Investment Banker

Managing Director

Company Secretary

Chief Legal Officer

Business Development Director

Mergers & Acquisitions Director

Corporate Development Manager

Finance Director

Legal Counsel

Compliance Officer

Investment Manager

Private Equity Manager

Transaction Advisory Manager

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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