Document background
The Non Compete Clause In Share Purchase Agreement is a critical component of business acquisition transactions in India, designed to protect the purchaser's investment by preventing sellers from competing with the business they've sold. This document becomes particularly relevant in scenarios where the selling shareholders possess significant industry knowledge, customer relationships, or technical expertise that could pose a competitive threat if used to compete against the acquired business. The clause must be carefully drafted to comply with Indian legal requirements, particularly the Contract Act and Competition Act, while remaining commercially effective. It typically includes detailed definitions of restricted activities, geographical limitations, and duration of restrictions, along with enforcement mechanisms suitable under Indian law. The document is commonly used in both domestic and cross-border transactions where Indian assets or operations are involved.
