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Share Purchase Agreement

Two parties, where one is a seller and the other is a buyer, often comes into an agreement called Share Purchase Agreement. Seller decides to sell the certain number of shares to the buyer at a specific price rate.

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Overview of Share Purchase Agreement

An agreement in which terms and conditions pertaining to sale and purchase are brought on the same page, that is, certain things comes to a conclusion in the matters related to sale and purchase of shares of a company. The purpose of Share Purchase agreement is to easily transfer the ownership of shares in a company from a seller to a purchaser.

Two parties, where one is a seller and the other is a buyer, often comes into an agreement called Share Purchase Agreement. Seller decides to sell the certain number of shares to the buyer at a specific price rate. The aim of such agreement is to reflect that the terms and conditions of the agreement were mutually settled by both the parties. Share purchase agreement contains the number of shares to be sold, the conditions precedent, and the other agreeable conditions by two parties. Once the Share Purchase Agreement has been signed the process will begin to dispense the share.

What is the need of Share Purchase Agreement?

Share Purchase Agreement is a kind of business practice performed between two parties, seller and purchaser. The agreement consists of shareholder rights, duties, and other varied terms. In the absence of this document it is nearly impossible to maintain the coherency between the two parties.

With the help of Share Purchase Agreement both the parties can easily protect their own interest.

Information to Put in a Share Purchase Agreement

Information to Put in a Share Purchase Agreement

Benefits of Share Purchase Agreement

Benefits of Share Purchase Agreement
  • Due Diligence

    A Share Purchase Agreement is a kind of principal business process which involves an investor in its activities. Though there are number of organizations that are willingly choose the path of easygoing strategy to deal with such issues, the absence of an agreement can put the future of business activities in jeopardy.

  • Protect Parties

    Share Purchase Agreement provides an opportunity to both the parties to secure and protect their interest before they indulge in the process of exchanging the shares. This agreement speaks about every part of the transaction and is pivotal for both the parties to understand every clause canvassed in the document and must realise its importance.

Procedure for Share Purchase Agreement

  • A well efficient lawyer from our team will get in touch with you and will make you understand the total process and the requirement of the share purchase agreement
  • Once the objectives are clearly understood, the lawyer will draft a sample Share Purchase Agreement as per the need.
  • We will sent the share purchase agreement for review purpose
  • The whole process will take around 3-4 days to complete.

Important Aspects of Shareholder Agreement and the Share Purchase Agreement

  • Shareholder Agreement and Share Purchase Agreement is the normal aspects that start and built up the connection between two parties so the organization that is investing wild be engaged with the procedure.
  • Organizing the transaction will rely on the arrangement between two parties.
  • The expectation of one party with the ascent in the investment will be served to broaden.
  • A significant level of returns with different parties primarily procured dependent on the rests that are made and execution to a more prominent level.

Important Aspects of Business Transfer Agreement

  • Business Transfer Agreement is a Sale Deed that is called an end record for move with no between reliance of gatherings
  • Transferor and transferee does not need the assistance apart from any kind of transition period
  • Utmost priority in transferee would receive business in the best way as they represent value
  • The seller has the authority to put the secured position for better consideration
  • Buyer feels secured for receiving business that is being represented by the seller

Difference between Share Purchase Agreement and Shareholder’s Agreement

Shareholder’s Agreement

Normally the shareholders hold an important part in the ownership of an organization. Shareholder’s agreement talk about the rights and duties of the shareholder, it specifies the obligation between the company and the shareholder and is called as the Shareholder’s Agreement. It contains the complete aspect for dissolving problems and disputes of the shareholders.

Share Purchase Agreement

An agreement between two parties who decides to sell and purchase shares at a specific rate. In the Share Purchase Agreement, the seller decides to sell the shares to the buyers at a particular price. The purpose of drafting this agreement is to make sure that the every rules and regulations are followed and also the agreement is made with the mutual consent of both the parties.

Understanding Business Transfer Agreement

Typically, the Business Transfer Agreement involves two parties when the business is made alongside the liabilities and resources that are moved for different parties. Actually, these exchanges will be known as the slump sale.

Slump sale will be conveyed by the organization with the business organizing to the highest level of excellent. It for the most part conveyed with the organization alone with the outsider.

At the point when it basically drafted an agreement for selling that incorporates the insights about the amount along with the payment for consideration. At the point when thought for slump sale is fundamentally empowered with the shares that are held to effectively re-appraising body having the slump sale and they are named as the broad option for trade.

Commercial Intent of Share Purchase Shareholder Agreement: SPCA

The Shareholder Agreement and Share Purchase Agreement has been clubbed together to offer an agreement which is for the most part known as the SPCA or Share Purchase Shareholders Agreement.

To comprehend the business purpose of Share purchase shareholder agreement clear understanding of below is an absolute necessity.

Share Purchase Agreement

Share Purchase Agreement for the most part entered in the parties when an organization likes to transfer the share alongside numerous quantities of other individual or organization. The Share Purchase Agreement is fundamentally empowered by the conveyance document.

Shareholder’s Agreement

The Shareholders Agreement primarily characterized with the connection between investor and company empowered with different angles. This agreement is drafted on the basis of different rights and obligations from shareholders that predominantly have the instrumental angles to secure shareholder.

A large portion of the organizations and shareholders for the most part like to go into the agreement dependent on the Companies Act that primarily empowered every other perspective with the provision. It fundamentally makes transparency dependent on the respects to rights with a commitment for both the parties that tremendously helps the litigation.

Shareholder’s Share Purchase Agreement

With Shareholders Share Purchase Agreement, it for the most part has the exchange of sale in equity from 1 party to numerous number of parties. It is considered as the last and restricting report available to be purchased to helpfully partake in the most elevated way.

A portion of the accompanying significant transactions are conveyed dependent on the structured with the PASHA:

A portion of the accompanying significant transactions

Taxation on the Transactions in BTA

  • Taxation rely in line with u/s 50 B in the Income Tax Act
  • Net worth for slump sale is the aggregate value of total assets undertaking with the value of liabilities that are undertaking based on account
  • With 100% subsidiary holding company made the Slump sale

Taxation on CISPA

  • When a share is held for less than a year, it would give short term capital gain
  • Shares in short-term capital assets include u/s 111A(1)(b)(i) of the Income Tax Act

Frequently Asked Questions

Two parties, where one is a seller and the other is a buyer, often comes into an agreement called Share Purchase Agreement.

The purpose of Share Purchase agreement is to easily transfer the ownership of shares in a company from a seller to a purchaser.

  • Name of the purchaser of the shares
  • Name of the seller of the shares
  • Company from which shares being sold
  • Value of shares
  • The law that governs the agreement
  • The type of shares that are being sold

A Share Purchase Agreement is a kind of principal business process which involves an investor in its activities. Though there are number of organizations that are willingly choose the path of easygoing strategy to deal with such issues, the absence of an agreement can put the future of business activities in jeopardy.

A guarantee is a legally binding proclamation of affirmation given by the dealer to the purchaser that a specific situation exists. They are especially significant in share buy understandings, as they assign hazard and risk between the vender and purchaser.

A warranty is a statement by the seller about a particular aspect of the target company's business. An indemnity is a promise to reimburse the buyer in respect of a particular type of liability, should it arise.

  • Investor Agreement and Share Purchase Agreement is the normal aspects that start and built up the connection between 2 gatherings so the organization that is putting wild be engaged with the procedure.
  • Organizing the exchange will be founded on the course of action between the two gatherings
  • The expectation of one gathering with the ascent in the venture will be served to broaden.

A shareholders' agreement, also called a stockholders' agreement, is an arrangement among a company's shareholders that describes how the company should be operated and outlines shareholders' rights and obligations.

Typically, the Business Transfer Agreement involves two parties when the business is made alongside the liabilities and resources that are moved for different parties.

  • A well efficient lawyer from our team will get in touch with you and will make you understand the total process and the requirement of the share purchase agreement
  • Once the objectives are clearly understood, the lawyer will draft a sample Share Purchase Agreement as per the need.
  • We will sent the share purchase agreement for review purpose
  • The whole process will take around 3-4 days to complete.

Shareholder’s agreement talk about the rights and duties of the shareholder, it specifies the obligation between the company and the shareholder and is called as the Shareholder’s Agreement. It contains the complete aspect for dissolving problems and disputes of the shareholders.

If there is no agreement in place, shareholders face the risk of losing valuable information and technique when one of them leaves the company. Moreover, the' agreement also establishes the way dividends are shared. This is important when shareholders contribute differently to the business.

A shareholder can sell or give away shares to anyone unless the company's articles impose an effective restriction, or the shareholder has agreed not to transfer them or to deal with them in some other way in a binding contract.

Shareholders and directors have two completely different roles in a company. The shareholders (also called members) own the company by owning its shares and the directors manage it. Unless the articles say so (and most do not) a director does not need to be a shareholder and a shareholder has no right to be a director.

Companies are owned by their shareholders but are run by their directors. However, shareholders do have some power over the directors although, to exercise this power, shareholders with more that 50% of the voting powers must vote in favour of taking such action at a general meeting.

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Priyanka Bajpayee
| Date: 30 Mar, 2020

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