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Share Transfer Agreement Between Individuals Template for India

A legally binding agreement governed by Indian law that facilitates the transfer of shares from one individual to another. This document outlines the terms and conditions of the share transfer, including the number and type of shares, purchase price, payment terms, and completion mechanics. It incorporates necessary compliance requirements under the Companies Act 2013, relevant SEBI regulations, and Indian tax laws. The agreement includes representations and warranties about share ownership, provisions for tax obligations, and necessary procedural requirements for effective transfer of shares in accordance with Indian corporate law.

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What is a Share Transfer Agreement Between Individuals?

The Share Transfer Agreement Between Individuals is a crucial document used in Indian corporate transactions when one individual wishes to transfer ownership of shares to another individual. This agreement is essential for documenting the terms and conditions of the transfer, ensuring compliance with Indian corporate law, particularly the Companies Act 2013, and protecting both parties' interests. It becomes necessary when shareholders wish to sell their holdings, during succession planning, or as part of investment transactions. The document must comply with Indian stamp duty requirements, tax regulations, and any specific requirements in the company's articles of association. It typically includes details about the shares being transferred, consideration amount, representations about share ownership, and completion mechanics. This agreement is particularly important in private companies where shares are not traded on public exchanges and transfer restrictions may apply.

What sections should be included in a Share Transfer Agreement Between Individuals?

1. Parties: Details of the transferor and transferee, including full names, addresses, and PAN numbers

2. Background: Context of the share transfer, including details about the company whose shares are being transferred

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

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

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

6. Completion: Process and timeline for completing the transfer, including delivery of share certificates and payment

7. Representations and Warranties: Warranties by transferor regarding ownership, title, and absence of encumbrances on shares

8. Tax Provisions: Responsibilities for payment of taxes, including capital gains tax and TDS requirements

9. Notices: Process and addresses for serving notices under the agreement

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

What sections are optional to include in a Share Transfer Agreement Between Individuals?

1. Tag-Along Rights: Include when transferor retains some shares and transferee needs protection for future sales

2. Drag-Along Rights: Include when transferee might want to force transferor to sell remaining shares in future

3. Non-Compete Clause: Include when transferor needs to be restricted from competing with the company

4. Partly Paid Shares: Include when the shares being transferred are not fully paid up

5. Company Approval: Include when company's articles require board/shareholder approval for transfer

6. Nominee Arrangements: Include when shares are held by nominee on behalf of beneficial owner

7. Escrow Arrangements: Include when payment or share certificates need to be held in escrow

What schedules should be included in a Share Transfer Agreement Between Individuals?

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

2. Schedule 2 - Company Information: Details about the company including registration number, registered office, and capital structure

3. Schedule 3 - Transfer Forms: Share transfer forms (Form SH-4) as required under Companies Act, 2013

4. Schedule 4 - Required Consents: List of all required consents and approvals for the transfer

5. Appendix A - Board Resolution: Copy of board resolution approving the transfer (if required)

6. Appendix B - Existing Share Certificate: Copy of existing share certificate(s) to be transferred

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

India

Publisher

Ƶ

Document Type

Stock Agreement

Cost

Free to use

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