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Share Purchase Agreement Draft

FAQ's on Share Purchase Agreement Draft

What is a Share Purchase Agreement?

A Share Purchase Agreement (SPA) is a legally binding contract between a seller and a buyer that outlines the terms and conditions of selling shares in a company. It specifies the number of transferred shares, the purchase price, payment terms, warranties, representations, and other relevant details.

What is a Business Transfer Agreement?

A Business Transfer Agreement (BTA) is a broader term that encompasses the sale of a business, including its assets, liabilities, and shares. It is a more comprehensive agreement than an SPA, which focuses solely on the transfer of shares.

What is the purpose of a Share Purchase Agreement?

The primary purpose of a SPA is to document the sale of shares in a company and ensure that both the seller and the buyer are protected throughout the transaction. It provides clarity, allocation of rights and liabilities, warranties, confidentiality protection, dispute resolution mechanisms, tax considerations, compliance with regulations, facilitation of due diligence, smooth transfer of ownership, and protection against future claims.

Who is the seller in a share purchase agreement?

The seller in a share purchase agreement is the party transferring ownership of the shares in the company. They are responsible for providing accurate information about the company and its shares. They are liable for any breaches of the warranties or representations made in the agreement.

What is the stamp duty for a share purchase agreement?

Stamp duty is a tax levied on certain legal documents, including share purchase agreements. The stamp duty rate for share purchase agreements in India varies depending on the state where the agreement is executed. Generally, the stamp duty rate ranges from 0.1% to 0.2% of the consideration paid for the shares.

Is stamp duty payable on a share purchase agreement?

Yes, stamp duty is payable on share purchase agreements in India. The seller is typically responsible for paying the stamp duty. However, the buyer may also be liable for the payment if the seller fails to do so.

What is the law on share purchase agreements?

The law governing share purchase agreements in India is primarily the Companies Act 2013. However, other laws, such as the Income Tax Act 1961, the Securities and Exchange Board of India (SEBI) (Issue of Capital and Continuing Obligations) Regulations, 2000, and the Contract Act, 1972, may also be applicable depending on the specific circumstances of the transaction.