A Forward Share Purchase Agreement is a crucial document used in Indian corporate transactions where parties agree to a future transfer of shares at predetermined terms. This agreement type is particularly relevant in scenarios involving strategic investments, corporate restructuring, or planned exits, where the actual share transfer is intended to occur at a future date. The document, governed by Indian law, must comply with the Companies Act 2013, SEBI regulations, and other relevant legislation. It typically includes detailed provisions on share valuation, payment terms, conditions precedent, representations and warranties, and completion mechanics. The agreement is essential for both listed and unlisted companies engaging in share transactions, providing clarity and legal certainty for all parties involved in the future share transfer.
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1. Parties: Identification of the seller(s) and buyer(s), including full legal names and addresses
2. Background: Context of the transaction, including details about the target company and purpose of the agreement
3. Definitions and Interpretation: Definitions of key terms and interpretation rules used throughout the agreement
4. Sale and Purchase of Shares: Core transaction terms including number of shares, price, and forward purchase mechanism
5. Purchase Price and Payment: Detailed payment terms, including payment schedule, method, and any adjustments
6. Conditions Precedent: Conditions that must be satisfied before the completion of the share purchase
7. Pre-Completion Obligations: Obligations of parties between signing and completion, including company conduct requirements
8. Completion: Process and requirements for completing the share transfer
9. Warranties and Representations: Standard warranties from both parties regarding capacity, authority, and share ownership
10. Covenants: Ongoing obligations of the parties, including non-compete and confidentiality provisions
11. Termination: Circumstances under which the agreement can be terminated and consequences
12. Governing Law and Jurisdiction: Specification of Indian law as governing law and jurisdiction for disputes
13. General Provisions: Standard boilerplate clauses including notices, amendments, and entire agreement
1. Tag-Along Rights: Include when minority shareholders need protection to sell their shares on same terms
2. Drag-Along Rights: Include when majority shareholders need right to force minority to join in sale
3. Regulatory Compliance: Include for listed companies or when specific regulatory approvals are needed
4. Foreign Exchange Provisions: Include when transaction involves foreign buyers or cross-border elements
5. Tax Indemnities: Include when specific tax risks need to be allocated between parties
6. Break Fee: Include when parties want to specify compensation for failed completion
7. Escrow Arrangements: Include when part of purchase price needs to be held in escrow
8. Employee Matters: Include when transaction affects key employees or management
1. Share Details: Details of shares being sold including class, numbers, and distinctive numbers
2. Company Information: Key information about the target company including corporate and financial details
3. Warranties: Detailed seller warranties about the company and shares
4. Completion Requirements: Detailed list of documents and actions required for completion
5. Encumbrances: List of existing encumbrances on shares and release mechanism
6. Required Consents: List of third-party and regulatory consents required
7. Disclosure Letter: Seller's disclosures against warranties
8. Form of Share Transfer Deed: Template for share transfer documentation
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