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Share Transfer Agreement Private Company Template for India

A Share Transfer Agreement is a legally binding document used in India to facilitate and document the transfer of shares in a private company from one party (transferor) to another (transferee). The agreement, governed by Indian law, particularly the Companies Act, 2013, outlines the terms and conditions of the share transfer, including the number and type of shares, consideration amount, warranties, and completion mechanics. It ensures compliance with Indian corporate law requirements while protecting the interests of all parties involved in the transaction.

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What is a Share Transfer Agreement Private Company?

The Share Transfer Agreement Private Company is a crucial document used in Indian corporate transactions when ownership of shares in a private company needs to be transferred from one party to another. This agreement is essential for documenting the terms and conditions of the transfer, ensuring compliance with the Companies Act, 2013, and other relevant Indian legislation. It typically includes details about the shares being transferred, purchase price, warranties from both parties, completion mechanics, and any conditions precedent. The document becomes particularly important for maintaining proper corporate records, establishing clear ownership rights, and preventing future disputes. It must comply with specific requirements under Indian law, including proper stamping and registration where necessary, and may need to account for any restrictions on transfer in the company's articles of association.

What sections should be included in a Share Transfer Agreement Private Company?

1. Parties: Identification of the Transferor(s), Transferee(s), and the Company whose shares are being transferred

2. Background: Context of the transfer, including current shareholding structure and reason for transfer

3. Definitions: Definitions of key terms used throughout the agreement

4. Details of Transfer: Specific details of shares being transferred, including number, class, and distinctive numbers

5. Consideration: Purchase price for the shares and payment terms

6. Completion: Timing and mechanics of the transfer completion, including actions required by each party

7. Transferor's Warranties: Warranties regarding share ownership, authority to sell, and absence of encumbrances

8. Transferee's Warranties: Warranties regarding authority to purchase and compliance with laws

9. Company Covenants: Company's obligations regarding the transfer and share certificate issuance

10. Tax Provisions: Allocation of tax liabilities and responsibilities

11. Notices: Process for sending formal notices between parties

12. Governing Law and Jurisdiction: Specification of Indian law as governing law and jurisdiction for disputes

13. General Provisions: Standard clauses including entire agreement, amendments, and counterparts

What sections are optional to include in a Share Transfer Agreement Private Company?

1. Pre-Completion Obligations: Used when there are specific actions required before completion, such as obtaining regulatory approvals

2. Non-Competition: Include when transferor needs to be restricted from competing post-transfer

3. Confidentiality: Detailed confidentiality provisions when sensitive information is involved

4. Tag-Along Rights: Include when other shareholders have tag-along rights that need to be addressed

5. Board Nomination Rights: When transfer includes rights to nominate directors

6. Foreign Exchange Compliance: Required when transfer involves non-resident parties

7. Earn-out Provisions: Include when part of consideration is contingent on future performance

8. Power of Attorney: When one party needs authority to execute documents on behalf of another

What schedules should be included in a Share Transfer Agreement Private Company?

1. Share Details: Detailed description of shares including certificate numbers, distinctive numbers, and share history

2. Consideration Calculation: Detailed breakdown of share value calculation and payment terms

3. Completion Checklist: List of all documents and actions required for completion

4. Corporate Authorizations: Copies of board resolutions and other corporate approvals

5. Warranties: Detailed list of warranties given by transferor regarding the shares and company

6. Encumbrances: List of any existing encumbrances on the shares

7. Company Information: Key company information including financial statements and material contracts

8. Transfer Forms: Prescribed forms for share transfer as per Companies Act

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

Jurisdiction

India

Publisher

Genie AI

Document Type

Stock Transfer Form

Cost

Free to use

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