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Shareholder Exit Agreement Template for India

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Key Requirements PROMPT example:

Shareholder Exit Agreement

"I need a Shareholder Exit Agreement for my technology startup where I, as a minority shareholder holding 15% shares, plan to exit by March 2025, with preference for a third-party independent valuation and payment in three installments."

Document background
The Shareholder Exit Agreement serves as a crucial document in Indian corporate law, facilitating the orderly departure of shareholders from a company. This agreement becomes necessary when a shareholder wishes to sell their stake, whether due to retirement, strategic realignment, or dispute resolution. Governed by the Companies Act 2013 and other relevant Indian legislation, it provides a comprehensive framework for managing the exit process, including share valuation methods, payment structures, and compliance requirements. The document addresses key aspects such as representations and warranties, confidentiality obligations, and dispute resolution mechanisms, while ensuring adherence to regulatory requirements and protecting the interests of all parties involved. It's particularly important in private companies where shares are not freely transferable and in situations involving foreign investment or complex shareholding structures.
Suggested Sections

1. Parties: Identification of all parties to the agreement including the exiting shareholder(s), remaining shareholders, and the company

2. Background: Context of the agreement including current shareholding structure and reason for exit

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

4. Exit Mechanism: Detailed process and procedure for the shareholder exit, including timing and steps

5. Valuation: Methodology for determining the share price and terms of valuation

6. Payment Terms: Structure and timeline of payments, including any installment arrangements

7. Representations and Warranties: Statements of fact and assurances from all parties regarding their capacity, authority, and share ownership

8. Confidentiality: Obligations regarding confidential information and trade secrets

9. Tax Matters: Allocation of tax liabilities and responsibilities

10. Notices: Process for sending and receiving formal communications between parties

11. Governing Law and Jurisdiction: Specification of applicable law and courts having jurisdiction

12. Dispute Resolution: Process for resolving disputes, including mediation or arbitration procedures

Optional Sections

1. Tag-Along Rights: Used when remaining shareholders are given the right to join the exit on similar terms

2. Drag-Along Rights: Included when majority shareholders can force minority shareholders to join in the sale

3. Non-Compete and Non-Solicitation: Added when the exiting shareholder needs to be restricted from competing or soliciting employees/customers

4. Transition Services: Required when the exiting shareholder has been actively involved in management

5. Foreign Exchange Compliance: Necessary when the exit involves foreign shareholders or cross-border transactions

6. Regulatory Approvals: Included when specific regulatory clearances are required for the exit

7. Employee Stock Options: Needed when the exiting shareholder holds employee stock options

8. Intellectual Property Rights: Required when the exiting shareholder has been involved in IP creation or ownership

Suggested Schedules

1. Schedule 1 - Share Details: Details of shares being transferred, including share certificate numbers and shareholding history

2. Schedule 2 - Valuation Report: Independent valuation report or agreed valuation methodology details

3. Schedule 3 - Payment Schedule: Detailed breakdown of payment instalments and timelines

4. Schedule 4 - Company Information: Key company information including financial statements and material contracts

5. Schedule 5 - Completion Checklist: List of actions and documents required for completing the exit

6. Appendix A - Share Transfer Forms: Required statutory forms for share transfer

7. Appendix B - Board Resolutions: Relevant board resolutions approving the exit

8. Appendix C - Tax Clearances: Necessary tax clearances and certificates

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓÆµ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions











































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Relevant Industries

Technology

Manufacturing

Financial Services

Real Estate

Healthcare

Retail

Professional Services

Media and Entertainment

Infrastructure

Education

Telecommunications

Energy

E-commerce

Biotechnology

Hospitality

Relevant Teams

Legal

Finance

Corporate Secretarial

Compliance

Board of Directors

Corporate Strategy

Mergers & Acquisitions

Risk Management

Investor Relations

Corporate Communications

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Company Secretary

Legal Counsel

Corporate Lawyer

Investment Banker

Financial Controller

Managing Director

Board Member

Compliance Officer

Corporate Strategy Director

Mergers & Acquisitions Director

Private Equity Manager

Risk Management Officer

Business Development Director

Shareholder Relations Manager

Industries







Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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