Agreement for Sale of Shares of a Private Limited
Company
THIS AGREEMENT made at __________ this _____ day of 200___ BETWEEN (1) ABC
(2) DEF and (3) GHI, all having their address
at ______________________________________________________________, hereinafter
jointly referred to as “THE VENDORS” (which expression shall, unless it
be repugnant to the context or meaning thereof be deemed to mean and include
their respective heirs, executors and administrators) of the FIRST PART;
XYZ Private Ltd., a Private Limited Company having its’ registered office at
____________________ , hereinafter called “THE COMPANY” (which
expression shall unless it be repugnant to the context or meaning thereof be
deemed to mean and include its successors and Assigns) of the SECOND PART;
AND
(1) MNO, (2) PQR and (3) STU, all of __________, Indian Inhabitants, having
their address at _____________________________________________, hereinafter
jointly referred to as “THE PURCHASERS” (which expression shall unless
it be repugnant to the context or meaning thereof, be deemed to include their
respective heirs, executors, administrators and Assigns) of the THIRD PART;
WHEREAS:-
(a) The
Company is a private limited company incorporated and registered under the
Companies Act, 1956 having it’s Registered Office at
________________________________________. The Company was registered and
incorporated under Certificate of Incorporation No. _______________ of 1958/59
dated ____________ 1958.
(b) The
authorized, issued, subscribed and paid up capital of the Company is Rs.
23,50,000/- divided into 23,500 equity shares of the face value of Rs. 100/-
each.
(c) The
Vendors between themselves hold and are the registered holders and Owners of
the entire issued, subscribed and paid up capital of the Company. The detailed
particulars of the said issued, subscribed and paid up capital of the company
which is held by the Vendors as also the particulars of the Directors of the
company are as more particularly set out in the ANNEXURE-I hereto.
(d) The
objects for which the Company was established are as set out in the Memorandum
and Articles of Association of the Company and a Certified Copy of the same is
furnished to the Purchasers.
(e) The
Company was till recently carrying on business of ____________________at
Mumbai, which activities are now permanently closed. The business activities of
the Company have come to a standstill and the manufacturing process is also
stopped. All the workers and employees of the Company are lawfully retrenched
by the Company and there are no outstanding claims of employees whatever. The
company has no other place of manufacturing business.
(f) The
Vendors at all material times were and are presently in complete charge,
control and management of the company.
(g) The
certified copies of the accounts for last three years together with Income Tax
Returns namely Balance Sheet, Profit & Loss Account along with Schedules
and Groupings are furnished to the Purchasers.
(h) The
Particulars of the Fixed Assets owned by the Company are as set out in the Schedule
I hereto and the same are free from any encumbrances and reasonable doubts
of whatsoever nature.
(i) The
present liabilities of the Company as on ____________ are as set out in the Schedule
II hereto. The Vendors have represented to the Purchasers that save and
except the said liabilities there are no other outstanding liabilities of
whatsoever nature upon the Company.
(j) The
Company is holding various licences issued by various authorities, a list of
which is set out in the Schedule III hereto.
(k) The
Company is holding Bank Accounts, a list of which is set out in the Schedule
IV hereto.
(l) The
Vendors and each of them as the beneficial and registered owners of the said
shares in the capital of the Company have agreed with the Purchasers for the
sale to them of all the said 23,500/- fully paid up equity shares of Rs. 100/-
each at the price and consideration of Rs. 200/- per share aggregating to Rs.
47,00,000/- (Rupees forty seven lacs only) free from any encumbrances, pledge,
charge, lien or claim whatever.
(m) The
parties are desirous of reducing into writing the terms and conditions of the
sale and purchase of the said shares as hereinafter appearing.
NOW THESE PRESENTS WITNESSETH and it is
recorded by and between the parties hereto as hereunder:-
1. Each of
the Vendors as the beneficial and registered owners hereby sell and the
Purchasers hereby purchase the said 23,500/- equity shares (being the entire
authorised, issued, subscribed and paid up capital of the company) as more
particularly set out in the Annexture I hereto as fully paid up shares,
free from all encumbrances and reasonable doubts whatever, at the price and
consideration of Rs. 200/- per each share aggregating to Rs. 47,00,000/-
(Rupees forty seven lacs only). The aforesaid consideration shall be paid by
the Purchasers to the Vendors as under:-
(a) Rs. 9,40,000/- (Rupees nine lacs forty thousand only)
on or before execution hereof (the receipt whereof the Vendors do and each of
them doth hereby acknowledge and confirm); and
(b) Rs. 37,60,000/- (Rupees thirty seven lacs sixty thousand
only) being balance payable in ten monthly installments as per the statement
annexed as Annexture No. II hereto.
—————————-
Rs. 47,00,000/-
Total
—————————-
(Rupees forty seven lacs only)
2. The
Vendors shall as between them be entitled to receive the consideration in
proportion to their respective shareholding.
3. It
shall be the sole and exclusive responsibility/obligation of Vendors to pay,
clear, settle and discharge the liabilities of the company as set out in the Schedule
II hereto. The said liabilities are as on ________________. It shall be the
sole, exclusive and absolute responsibility and obligation of the Vendors to
obtain complete discharge from the said liabilities within a period of six
months from the date hereof. If the Vendors fail to pay, settle and discharge
the said liabilities as aforesaid within the agreed period, in that event the
Purchasers shall be fully entitled to pay and settle the same as may be deemed
fit by them out of the amounts of installments payable to the Vendors.
4. The
Vendors do and each of them for themselves as also on behalf of the Company,
hereby declare, confirm, represent and assure to the Purchasers as under:—
(a) The
Company is the sole and absolute owner of the immovable property admeasuring
about _______ sq.yds. and bearing Cadestral Survey Nos. ________ situated at _________
together with structures standing thereon and more particularly described in
the SCHEDULE V hereunder written (hereinafter referred as “the said
property”) and has the absolute and sole right to hold, use, occupy and
possess the same.
(b) That
the said property is free from all claims, encumbrances and reasonable doubts
of any nature whatsoever and the same are not attached either before or after
judgement or at the instance of any taxation authority or any other authorities
and neither the Vendors nor the company has given any undertakings to the
taxation authorities or any authorities so as not to deal with or dispose of
the right, title and interest in the said property.
(c) Save
and except the Company no other person has or had any claim, share, right,
title or interest in the same.
(d) That
neither the Vendors nor the company have created any mortgage, charge, lien,
tenancy, licence or any encumbrances or liability in respect of the said
property and that they have not done any act whereby the rights in respect of
the said property have been prejudiced or jeopardised in any manner whatsoever.
(e) There
are no proceedings pending in any court as on the date concerning touching or
affecting the said property.
(f) There
is no attachment or prohibitory Order issued by the competent authority or any
Court or Tax Authorities or by any other authority prohibiting the company from
dealing with the said property.
(g) Neither
the Vendors nor the company has entered into any arrangement, agreement or commitment
in respect of the said property nor created any third party rights in respect
of the same or any part thereof; and
(h) Neither
the Company nor the Vendors have at any time received any notice and/or
communication from the Municipal Corporation of Greater Bombay and/or from any
authorities directly and/or indirectly raising any dispute and/or challenging
the legality of the construction.
5. The
Vendors state that there are no outstanding charge/s in respect of any
liability of the company registered with the Registrar of Companies. If it is
ascertained that in respect of any charge so registered and satisfied but for
which no charge satisfaction certificate is filed with the Registrar of
Companies, in that event the Vendors shall, after following due process of law,
procure such charge satisfaction certificate from the Registrar of Companies in
respect of every charge registered with him. The same shall be so obtained by
the Vendors at their own cost, expenses and efforts for and on behalf of the Company
within a period of six months from the date hereof, time being of the essence.
6. All the
liabilities of the company whatever, disclosed or undisclosed accrued prior to
the date hereof or the cause of action which has commenced prior to the date hereof
are to be borne and paid by the Vendors, the price of shares agreed to herein
having been arrived at on the said footing. The Purchasers shall be entitled to
pay and clear the same out of the monthly instalments payable by them to the
Vendors. Notwithstanding the completion of the sale and purchase effected by
this agreement the obligations, indemnities, warranties and undertakings
contained and referred in this agreement shall continue to subsist so long as
may be necessary for the purpose of giving effect to each and every one of
them.
7. Each of
the Vendors hereby waive their respective right of pre-emption in respect of
the entire issued, subscribed and paid up share capital of the company and they
hereby give their specific and irrevocable consent and no objection for
transferring by the other the share holders in favour of the Purchasers.
8. The
Vendor No. 2 has on execution hereof agreed to retire as the Director of the
Company and has handed over his resignation as Director of the Company to the
Purchasers herein and he shall retire as the Director of the Company in the
method and manner set out hereinafter.
9. (A) On execution hereof the Vendors shall:—
(i) deliver
to the Purchasers all the relevant Share Certificates in respect of 4700 equity
shares, together with Share transfer forms duly filled in, executed and
attested.
(ii) hold a
Board meeting of the company at which it shall be Resolved that:—
(a) “the
transfers of the shares in respect of 4700 shares sold under this Agreement is
approved for transfer and registration in favour of the Purchasers or their
nominee’s subject only to their being duly stamped.”
(b) “that
the Purchasers Nos. 1 and 2 herein be appointed as Directors of the company.”
(c) “that
the letters of resignation of Vendor No. 2 resigning as Director of the company
is duly accepted.”
(iii) shall
do all acts and things to completely and properly effect the transfer of the
said 4700 equity shares in favour of the Purchasers and also to put the
Purchasers in control and management of the company in all respects along with
the Vendors.
(iv) shall
handover the original Share Certificates in respect of remaining 18,800 equity
shares together with duly executed transfer forms duly attested to Shri
________________________ in escrow (hereinafter referred to as the “Escrow
Agent”), for the purpose of time to time handing over the same to the
Purchasers in the manner and method recorded herein.
(B) The Vendors shall also inter alia carry
out the necessary acts, things and the procedure for the following:—
(i) get
the Purchaser Nos. 1 and 2 adopted and appointed as Directors on the Board of
the Company within a period of one week from the date hereof as also execute
and sign all the necessary Forms in that behalf and file the same with the
Registrar of Companies;
(ii) get
the transfer of the said 4700 equity shares approved by the Board of Directors
in favour of the Purchasers within a period of one week from the date hereof
and also get the same transferred in favour of the Purchasers by that date and
deliver the same to the Purchasers.
(iii) The
Vendor No.2 shall retire as Director of the company within a period of one week
from the date hereof.
(C) Against payment of each installment as provided
in
Clause 1(b) above, the Vendors shall get 1880 equity shares transferred in
favour of the Purchasers and cause the same to be delivered to the Purchasers
through the said Escrow Agent holding them in Escrow as mentioned above. At the
time of payment of the last installment or the balance payment, the Vendors
shall get all the said equity shares transferred in favour of the Purchasers.
While transferring the said shares as aforesaid the Vendors shall comply with
the due process of law and the procedure as set out in sub-clause (B) above.
The original documents in respect of immoveable properties of the company shall
be also kept deposited in escrow with the said Escrow Agent and upon payment of
the entire consideration, the Purchasers shall be entitled to receive the same
from the said Escrow Agent.
10. The
Company’s Bank Account with Canara Bank, Opera House Branch, Mumbai will be
henceforth jointly operated by the Vendors Nos. 1 and 2 and the Purchasers Nos.
1 and 2 for a period of two months from the date hereof. The Vendors’ shall
close the company’s Bank Account with Canara Bank, Santacruz (West) Branch,
with immediate effect. After a period of two months from the date hereof, the
Purchasers shall be entitled to open a Bank account in the name of the company
to be operated exclusively by them. The Vendors shall on or before
_____________ get the requisite resolutions passed by the Board of Directors of
the company to give proper effect to the aforesaid.
11. As and
when the Purchasers become entitled to 70% of the total shareholding of the
company, the Board of Directors of the company will consist of three Directors
from the Purchasers group and two Directors from the Vendors group. As and when
the Purchasers become entitled to 100% shareholding of the company, the Board
of Directors of the company will consist of all the Directors from the
Purchasers group only and at that point of time the Directors representing
Vendors group shall forthwith resign as Directors of the company. The Vendors,
at the appropriate time, will get the requisite resolutions passed by the Board
of Directors as also by the General Body to give proper effect to the aforesaid
arrangement.
12. All the
records of the company shall be kept at the registered office of the company,
including the following:—
(i) The
Certificates of Incorporation, Common Seal and statutory and other Registers of
the Company; and
(ii) all
the statutory, non-statutory books and the records of the company including
cheque books etc.;
13. The
Vendors declare, state, represent, agree, covenant and assure unto the
Purchasers as under:—
(a) That
the Vendors are the sole and absolute owners of the said shares of the company
and that they have full right, power and authority to sell and transfer the
same to the Purchasers.
(b) That
the entire issued, subscribed and paid up capital of the company are held and
owned by and between them alone.
(c) That
the said shares are free from all encumbrances, charges and liens.
(d) That
the Vendors shall keep the said shares free from all encumbrances of whatsoever
nature and will not be entitled to create any mortgage, charge, lien or any
encumbrance or liability thereon and shall not directly and/or indirectly make
any efforts and/or attempts to obtain duplicates thereof.
(e) That
the Vendors shall not enter into any arrangement, agreement or commitment or
create any third party rights in respect of the said shares.
(f) That
the present Directors of the company are as set out in Annexture “I”
hereto and save and except the said persons there are no other Directors of the
Company.
(g) That
there are no winding up proceedings pending against the company anywhere in any
court nor any of its’ Creditors have issued any statutory notice of demand
under provisions of sections 433 and 434 of the Companies Act, 1956 nor there
are any legal proceedings pending against the Company or its Directors in any
Court of law.
(h) That
they have neither agreed to sell nor entered into any arrangement to sale or
dispose of their shareholding or any of the assets of the company nor the
Vendors or the company has agreed to allot or issue any new shares to any
person or party in any manner whatsoever.
(i) That
neither the Vendors nor the company has agreed to sell or entered into any
arrangements to dispose of any of the assets of the company.
(j) That
the auditors of the company shall, without any cost to the company, resign
their office stating that there are no circumstances connected with their
resignation required to be brought to the attention of the members.
(k) The new
auditors of the company with effect from _______________ shall be appointed as
may be decided by the Purchasers.
(l) The
company has not given any guarantee/s or surety in respect of any one’s
liabilities.
(m) All the
licences/approvals as set out in Schedule “III” hereto are valid
licences/approvals and they shall give their full co-operation and efforts to
obtain renewals thereof.
(n) Henceforth,
the Purchasers shall be the absolute owners of the said 4700 shares and shall
be in joint control and management of the company along with the Vendors.
14. It is
further and expressly agreed, confirmed and recorded as under:—
(a) Save
and except the liabilities of the company mentioned in the Schedule “II”
hereto, all the past liabilities of the Company shall be borne and paid by the
Vendors personally. Henceforth, the Vendors shall not directly or indirectly
create any liabilities of whatsoever upon the company.
(b) All the
liabilities and/or claims against the Company and not disclosed in the books of
accounts of the company as on _______ day of __________ 200__ including the
liabilities of unknown or known nature, contingent or non-contingent,
ascertained or unascertained, whether contractual or of tort, pursuant to any
act against environmental, accident, industrial accident, act of omission or
commission, tax or revenue liabilities (including any liability under income
tax, sales tax or excise or customs law) or any claim on account of sales
return goods, destruction, margin differences, demands from trade, quality of
products or any other act of commission or omission, prior to the date hereof,
in any manner relating and/or pertaining to the Company shall remain the sole
and exclusive personal liability of the Vendors and the Vendors shall
personally pay and discharge the same and the Vendors shall indemnify and hold
the Purchasers harmless against all such liabilities and consequential losses.
(c) The
Balance Sheet as on _________________ of the company as also the provisional
Balance Sheet of the company as on ________________ truly and fairly state the
financial affairs of the company as on that date.
(d) The
Vendors state that since the date of day
of _________ 200__:—
(i) No
material change has taken place in the value of the assets and liabilities of
the company in its fixed and current assets, stocks, inventories, sundry
debtors, sundry creditors and other liabilities other than immaterial changes
which may have occurred since then in the ordinary course of the business;
(ii) The
affairs of the company have been conducted only in the ordinary course of the
business;
(iii) There
has been no material change in the condition (financial or otherwise) of the
assets, liabilities, earnings, business, operations, affairs or prospects of
the company other than changes in the ordinary course of business; and
(iv) There
has been no damage, destruction, loss or other occurrence or development
(whether or not insured against), which either singly or in the aggregate
materially or adversely affects the assets, liabilities, earnings, business,
operations, affairs or prospects of the company.
(v) Except
in the ordinary course of its business, the Vendors have not created or
incurred any liability, commitment or obligation (absolute or contingent) of
whatsoever nature, except as shown in the Accounts, and except unsecured
current liabilities incurred in the ordinary course of business.
(e) The
Vendors state that all the employees, workmen and staff of the company have
either retired, retrenched and/or their services terminated in accordance with
law. The Vendors state that all the liabilities of the said employees, workmen
staff etc. is duly paid and discharged by the company in full and no liability
or any dispute of whatsoever nature with them under the provisions of
Industrial Disputes Act or any other law is pending. If any liability in that
account arises the same shall be the exclusive personal responsibility of the
Vendors to pay and discharge the same.
(f) There
are no legal proceedings of whatsoever nature pending and/or threatened which
may affect the company or its business and/or its assets.
(g) The
Vendors have, in respect of the company, properly and accurately prepared and
filed all Central, State, territorial, local and other tax returns and reports
required to be filed under all applicable Statutes, law regulations (including
without limitation under the Income Tax Act of 1961 and Companies Act, 1956).
The Company has paid, or made adequate provision in their books of account for
all Central, State, territorial, local and other taxes including all interest,
penalties and assessments, which shall be due and payable and all such taxes
due and payable have been or shall be fully discharged by the Vendors. As on
the date hereof the company has no liability for any income or wealth taxes, or
any sales, purchase or other turnover taxes, or any excise duty, octroi or any
other taxes or imposts whatsoever attributable to the company for any period.
15. Until
all the said shares, being the entire issued, paid up and subscribed capital of
the company is transferred in favour of the Purchasers and all the Vendors have
retired and/or the Purchasers have been co-opted as Directors and the complete
control and management of the company is handed over to the Purchasers, the
Vendors shall:—
(i) carry on the business of the company in the
ordinary course with the mutual concurrence of the Purchasers;
(ii) not enter into any contracts, arrangements or
commitments;
(iii) not incur any liability or obligation;
(iv) not
make any payments except payments of a routine nature and in discharge of liabilities
disclosed in
Schedule II hereto;
(v)
maintain all existing licences,
insurances and not do anything which will affect its’ validity;
(vi) not issue any shares;
(vii) not change the share capital of the company;
(viii) not declare, make or pay any dividend or
other distribution;
(ix) not make any payment to or for the benefit
(direct or indirect) of the Vendors; and
(x)
not pass any resolutions of the Board or
of the members of the company save and except as agreed herein.
16. The
Vendors personally guarantee the performance of this agreement by the Company
and of the obligations on the part of the Company and agree to keep indemnified
and hereby indemnifies the Purchasers against any loss arising on account of
non-performance thereof.
17. The
Vendors and each of them do hereby jointly and severally further agree to
indemnify and hereby indemnifies the Purchasers and their successor as also the
Company and hold them harmless from against the full amount of any loss, claim,
damage, liability or expense resulting to the Purchasers or the Company either
directly or indirectly from:
(i) any undisclosed litigations pending against,
by or affecting the business of the company or its assets/properties.
(ii) any undisclosed claims relating to the
affairs, business and properties of the Company.
(iii) any material inaccuracy on any representation
or warranty or any breach of any covenant or agreement by the Vendors whether
made herein or to any third parties affecting the affairs, business and properties
of the Company; and
(iv) any and all undisclosed claims, charges or
assessments made by any governmental body upon the company arising from acts or
omissions by its existing or former employee or agents or those of its or their
properties.
18. Towards
security for payment of the balance consideration amount payable by the
Purchasers to the Vendors, and till such time the said amounts are paid in
full, it is specifically agreed and recorded by and between the parties as
under:—
(a) The Vendors shall have paramount charge and
lien on the said shares.
(b) The Purchasers shall keep the said shares
free from all encumbrances of whatsoever nature and will not be entitled to
create any mortgage, charge, lien or any encumbrance or liability thereon and
shall not directly and/or indirectly make any efforts and/or attempts to obtain
duplicates thereof.
(c) The
Purchasers shall not enter into any arrangement, agreement or commitment or
create any third party rights in respect of the said shares.
(d) The
Purchasers being in the control and management of the company from the date
hereof, shall not create any sale, mortgage, charge, lien, lease, licence,
liability or any kind of encumbrances of whatsoever nature on the assets of the
company including its’ immoveable properties or enter into any arrangement,
agreement or commitment or create any third party rights in respect of the
same.
(e) If any
defaults in excess of permitted defaults are committed by the Purchasers in
payment of the said amount to the Vendors, in that event the Vendors shall be
fully entitled to restrain the Purchasers (i) from acting as shareholders
and/or Directors of the Company and/or (ii) from directly and/or indirectly
using the assets/properties of the company, till such time the defaulted amount
is paid and/or cleared.
Relying on the aforesaid statements,
representations and assurances of the Purchasers, the Vendors have agreed to
complete the sale of the said shares in favour of the Purchasers upon the terms
and conditions recorded herein.
19. The
parties hereto shall comply with all the provisions of the Company Law and
other applicable laws to the transaction.
20. This
agreement is subject to jurisdiction of the Courts at _________ only.
21. All
disputes, differences and questions whatsoever which shall arise either during
the continuance of this Agreement or afterwards between the parties hereto or
touching these presents or the construction or application thereof or as to any
act, deed or omission of any of the parties hereto in any way relating to these
presents or in implementation thereof shall be referred to a sole arbitrator in
case the parties to the dispute agree upon one or otherwise to two arbitrators
and to an umpire to be appointed by such arbitrators before entering upon the
reference and such arbitration shall be held in accordance with the Arbitration
and Conciliation Act, 1996 or any statutory modification or re-enactment
thereof for the time being in force. The entire Arbitration proceedings shall
be held, conducted and proceeded in the City of _________ only.
SCHEDULE I
Particulars of the Fixed
Assets/properties of the company
SCHEDULE II
List of Liabilities of the
company as on ______ day
of ___________ 2002.
SCHEDULE III
List of Licences held by the
Company:-
SCHEDULE IV
Particulars of the Bank accounts of the company:
IN WITNESS WHEREOF the Parties hereto have
affixed their respective hands and seal and executed these presents on the date
first hereinabove mentioned.
SIGNED AND DELIVERED )
By the within named (1)
ABC (2) DEF and )
(3) GHI the Vendors in the
presence of ……. )
THE COMMON SEAL of the
within named )
XYZ LIMITED, the Company
was hereunto )
affixed, pursuant to the
Resolution )
of its Board of Directors,
)
passed in that behalf, on
the )
______ day of _________
200___ in the )
presence of (1)
_____________________, )
Managing Director and
(2)____________ )
Director in the presence
of _________ )
SIGNED SEALED AND
DELIVERED by the )
Within named (1) MNO (2)
PQR and (3) STU, )
the Purchasers in the
presence of …….. )
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