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A Share Purchase Agreement spells out the terms and conditions when someone buys shares in an Indian company. It captures the price per share, total number of shares changing hands, and key promises made by both the buyer and seller.

These agreements play a vital role in mergers and acquisitions across India, protecting both parties under the Companies Act, 2013. They include important details like payment schedules, warranties about the company's health, and what happens if someone breaks their promises. Many businesses also add conditions that must be met before the deal closes, such as getting regulatory approvals from SEBI or other authorities.

Use a Share Purchase Agreement anytime you're buying or selling shares in an Indian company—especially for major stake acquisitions or complex deals. This agreement becomes essential when transferring shares between private entities, during mergers and acquisitions, or when foreign investors enter the Indian market.

The timing matters most when dealing with high-value transactions, multiple shareholders, or cross-border investments. Having this agreement in place before money changes hands protects both parties and helps meet SEBI regulations. It's particularly important when the deal includes special conditions like staged payments, management changes, or specific performance guarantees.

• Founders Stock Purchase Agreement: Specifically designed for startup founders acquiring initial company shares, including vesting schedules and founder-specific rights
• Conditional Share Purchase Agreement: Used when the share transfer depends on specific conditions being met, like regulatory approvals or performance targets
• Forward Share Purchase Agreement: Arranges future share purchases at predetermined prices, common in structured investments and private equity deals
• Restricted Share Purchase Agreement: Implements transfer restrictions and special conditions, often used for employee stock plans or closely-held companies

• Company Shareholders: Both selling and buying parties who are transferring ownership of shares, including individual investors, venture capitalists, and institutional investors
• Corporate Legal Teams: In-house counsel who draft and review Share Purchase Agreements to protect their company's interests
• Investment Bankers: Help structure deals and negotiate key terms, especially in larger M&A transactions
• External Law Firms: Specialist attorneys who draft complex agreements and ensure compliance with Indian corporate laws
• Company Directors: Must approve and often sign these agreements as authorized representatives
• Regulatory Bodies: SEBI and RBI officials who review agreements for compliance, particularly in listed company transactions

• Company Details: Gather complete corporate information, including registration numbers, share capital structure, and existing shareholder records
• Share Specifics: Document the exact number of shares, price per share, and total transaction value
• Due Diligence: Review company financials, outstanding liabilities, and any existing share transfer restrictions
• Payment Terms: Define payment schedule, escrow requirements, and any earn-out provisions
• Regulatory Checks: Confirm SEBI compliance needs and FDI regulations for foreign investors
• Warranties: List all seller representations about company health and share ownership
• Closing Conditions: Outline required approvals, documents, and timeline for completion

• Parties' Details: Full legal names, addresses, and registration numbers of buyers, sellers, and the target company
• Share Details: Precise description of shares being transferred, including class, face value, and distinctive numbers
• Consideration: Clear statement of price per share and total purchase amount with payment terms
• Warranties: Seller's guarantees about share ownership, company status, and financial condition
• Conditions Precedent: Required approvals and actions before closing
• Governing Law: Explicit statement choosing Indian law and jurisdiction
• Completion Mechanics: Step-by-step transfer process and timeline
• Dispute Resolution: Clear arbitration or litigation procedures under Indian law

A Share Purchase Agreement differs significantly from an Asset Purchase Agreement in both scope and legal implications under Indian law. While both are used in business acquisitions, they serve distinct purposes and carry different tax and liability implications.

• Transaction Object: Share Purchase Agreements transfer company ownership through share sales, while Asset Purchase Agreements deal with specific business assets
• Liability Transfer: Share purchases automatically transfer all company liabilities to the buyer, whereas asset purchases allow buyers to select specific liabilities
• Regulatory Requirements: Share transfers need SEBI compliance and corporate approvals, while asset transfers focus on property laws and registration
• Tax Treatment: Share transfers attract capital gains tax and securities transaction tax, while asset purchases involve GST and stamp duty considerations
• Third-Party Consents: Share deals rarely need external approvals, but asset transfers often require multiple vendor and contract novations