Stock Buy Back Agreement

Stock Buy Back Agreement Template for India

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Key Requirements PROMPT example:

"I need a Stock Buy Back Agreement for our listed IT company in India, planning to buy back up to 10% of shares through tender offer route by March 2025, ensuring full SEBI compliance and including specific provisions for foreign institutional investors."

Document background

The Stock Buy Back Agreement is a crucial document used when an Indian company decides to repurchase its own shares from existing shareholders. This corporate action may be undertaken for various reasons including returning excess cash to shareholders, improving earnings per share, optimizing capital structure, or increasing promoter shareholding. The agreement must comply with the Companies Act, 2013, and for listed companies, SEBI (Buy-back of Securities) Regulations, 2018. It contains detailed provisions about the buyback price, payment mechanisms, regulatory compliance requirements, tax implications, and completion procedures. The document is particularly important in the Indian context due to specific regulatory requirements around buybacks, including maintaining debt-equity ratios, maximum buyback limits, and post-buyback compliance obligations.

Suggested Sections

1. Parties: Identification of the Company and the Selling Shareholders

2. Background: Context of the buyback, including corporate approvals and regulatory compliance

3. Definitions: Key terms used throughout the agreement including Share Price, Completion Date, Encumbrance, etc.

4. Terms of Buyback: Number of shares, price per share, and aggregate consideration

5. Conditions Precedent: Prerequisites to be satisfied before the buyback can proceed

6. Completion Mechanics: Step-by-step process for executing the buyback transaction

7. Representations and Warranties: Statements of fact and assurances from both the company and selling shareholders

8. Taxation and Costs: Treatment of taxes, stamp duty, and transaction costs

9. Confidentiality: Obligations regarding non-disclosure of transaction details

10. Governing Law and Jurisdiction: Specification of Indian law and jurisdiction for dispute resolution

11. Notices: Process and details for formal communications between parties

12. General Provisions: Standard boilerplate clauses including amendments, waivers, and severability

Optional Sections

1. Foreign Exchange Compliance: Required when non-resident shareholders are involved, detailing FEMA compliance

2. SEBI Compliance: Required for listed companies, detailing compliance with SEBI buyback regulations

3. Tag-Along Rights: Optional protection for minority shareholders in case of selective buyback

4. Corporate Governance Requirements: Additional provisions for listed companies or companies with specific governance requirements

5. Escrow Arrangements: Required for larger buybacks or when staged payments are involved

6. Employee Stock Options: Required when buyback affects existing ESOP schemes

Suggested Schedules

1. Schedule 1 - Details of Shares: Detailed breakdown of shares being bought back, including share certificate numbers and distinctive numbers

2. Schedule 2 - Corporate Authorizations: Copies of board resolutions, shareholder resolutions, and other corporate approvals

3. Schedule 3 - Completion Checklist: Detailed list of actions and documents required for completion

4. Schedule 4 - Form of Transfer Deed: Template for share transfer documentation

5. Schedule 5 - Selling Shareholder Details: Complete information about selling shareholders including their shareholding patterns

6. Appendix A - Calculation of Purchase Price: Detailed methodology and calculations for determining the buyback price

7. Appendix B - Compliance Certificates: Required statutory and regulatory compliance certificates

Authors

Alex Denne

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

alex.den.21@genieai.co

Relevant legal definitions

Clauses

Relevant Industries

Information Technology

Manufacturing

Financial Services

Pharmaceuticals

Consumer Goods

Energy and Resources

Telecommunications

Real Estate

Infrastructure

Professional Services

Relevant Teams

Legal

Finance

Corporate Secretarial

Compliance

Tax

Treasury

Investor Relations

Corporate Development

Risk Management

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Company Secretary

Legal Counsel

Corporate Finance Manager

Compliance Officer

Finance Director

Investment Banker

Tax Manager

Corporate Strategy Director

Investor Relations Manager

Risk Management Officer

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