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Shareholder Indemnification Agreement for India

Shareholder Indemnification Agreement Template for India

A comprehensive legal document governed by Indian law that establishes indemnification obligations between shareholders and related parties. This agreement provides a detailed framework for risk allocation, defining the circumstances under which certain shareholders must compensate others for specified losses or liabilities. It incorporates provisions compliant with the Companies Act, 2013, and other relevant Indian legislation, including specific procedures for claiming indemnification, dispute resolution mechanisms, and enforcement procedures suitable for the Indian legal system.

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Shareholder Indemnification Agreement

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What is a Shareholder Indemnification Agreement?

The Shareholder Indemnification Agreement is a crucial document typically used in corporate transactions, investments, or restructuring scenarios where parties need to allocate specific risks and responsibilities. This agreement becomes particularly relevant in the Indian context where shareholders seek to protect themselves against unforeseen liabilities or specific identified risks. It is commonly used in conjunction with share purchase agreements, investment agreements, or shareholders' agreements, providing detailed mechanisms for compensation in case of breaches, misrepresentations, or specific triggering events. The agreement must comply with Indian corporate law, particularly the Companies Act, 2013, and related regulations, while considering enforceability requirements under Indian contract law. It typically includes specific provisions for claim procedures, limitation periods, and dispute resolution mechanisms suitable for the Indian legal environment.

What sections should be included in a Shareholder Indemnification Agreement?

1. Parties: Identification of all parties to the agreement, including the indemnifying shareholders and the indemnified parties

2. Background: Context of the agreement, including reference to the main transaction or circumstances necessitating the indemnification

3. Definitions: Detailed definitions of key terms used throughout the agreement, including 'Indemnified Parties', 'Losses', 'Claims', and 'Indemnification Period'

4. Scope of Indemnification: Detailed description of matters covered by the indemnification obligation

5. Indemnification Obligations: Specific obligations of the indemnifying shareholders, including payment terms and procedures

6. Limitations on Liability: Caps, thresholds, and exclusions to the indemnification obligations

7. Claims Procedure: Process for making and responding to indemnification claims, including notice requirements and time limits

8. Defense of Third Party Claims: Procedures for handling claims by third parties, including control of defense and settlement

9. Payment Mechanics: Details of how and when payments are to be made, including currency and method of payment

10. Duration: Term of the indemnification obligations and survival periods for different types of claims

11. Governing Law and Jurisdiction: Specification of Indian law as governing law and designation of courts having jurisdiction

12. Dispute Resolution: Procedures for resolving disputes between parties, including arbitration provisions if applicable

13. Miscellaneous: Standard boilerplate provisions including notices, amendments, assignment, and severability

What sections are optional to include in a Shareholder Indemnification Agreement?

1. Tax Matters: Specific provisions relating to tax indemnification, used when tax exposures are a significant concern

2. Security for Indemnification: Provisions for escrow or other security arrangements, used when there are concerns about the indemnifying party's ability to pay

3. Insurance: Provisions relating to insurance coverage and its interaction with indemnification obligations, used when insurance is relevant to the indemnification structure

4. Third Party Rights: Provisions regarding the rights of third party beneficiaries, used when certain non-parties need protection under the agreement

5. Specific Indemnities: Detailed provisions for specific known issues requiring indemnification, used when there are particular identified risks

6. Set-off Rights: Provisions allowing set-off against other payment obligations, used when there are ongoing financial relationships between the parties

What schedules should be included in a Shareholder Indemnification Agreement?

1. Schedule 1 - Indemnified Matters: Detailed list of specific matters, circumstances, or events covered by the indemnification

2. Schedule 2 - Calculation of Losses: Methodology for calculating losses and damages under the agreement

3. Schedule 3 - Claims Procedure: Detailed procedural requirements for making and processing claims

4. Schedule 4 - Excluded Claims: List of specific matters excluded from the scope of indemnification

5. Schedule 5 - Security Arrangements: Details of any escrow or other security arrangements for the indemnification obligations

6. Appendix A - Form of Claim Notice: Template for formal notification of claims under the agreement

7. Appendix B - Power of Attorney: Standard form of power of attorney if required for enforcement of rights

Authors

Alex Denne

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

Jurisdiction

India

Publisher

Ƶ

Cost

Free to use
Relevant legal definitions






































Clauses






























Relevant Industries

Financial Services

Technology

Manufacturing

Real Estate

Healthcare

Energy

Telecommunications

Professional Services

Retail

Infrastructure

Private Equity

Venture Capital

Consumer Goods

Industrial Services

Relevant Teams

Legal

Finance

Corporate Governance

Risk Management

Compliance

Corporate Development

Mergers & Acquisitions

Investor Relations

Board Secretariat

Treasury

Corporate Affairs

Relevant Roles

Chief Executive Officer

Chief Financial Officer

General Counsel

Corporate Secretary

Legal Director

Investment Director

Mergers & Acquisitions Director

Risk Manager

Compliance Officer

Board Member

Managing Director

Company Secretary

Senior Legal Counsel

Finance Director

Corporate Development Manager

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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