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Buy Sell Agreement Cross Purchase for India

Buy Sell Agreement Cross Purchase Template for India

A Buy-Sell Agreement (Cross Purchase) under Indian law is a legally binding contract between business owners or shareholders that establishes the framework for the purchase and sale of ownership interests upon specific triggering events. This agreement, governed by Indian contract law and corporate regulations, provides a structured mechanism where remaining shareholders directly purchase the shares of a departing shareholder. The document includes detailed provisions for valuation methods, payment terms, funding mechanisms, and compliance with Indian corporate and tax laws, ensuring smooth ownership transitions while maintaining business continuity and protecting all parties' interests.

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What is a Buy Sell Agreement Cross Purchase?

The Buy-Sell Agreement (Cross Purchase) is essential for businesses operating in India that want to maintain control over ownership transitions and protect the interests of all shareholders. This document becomes particularly relevant for closely-held companies, family businesses, and professional services firms where maintaining control over ownership is crucial. The agreement specifies how shares can be transferred between owners, typically triggered by events such as death, disability, retirement, or voluntary exit. Under Indian jurisdiction, it must comply with the Companies Act 2013, Indian Contract Act 1872, and relevant tax regulations. The cross-purchase structure means that remaining shareholders, rather than the company, purchase the departing shareholder's interests directly, which has specific tax and funding implications under Indian law. The agreement includes valuation mechanisms, payment terms, funding arrangements (often through insurance), and necessary procedural requirements for share transfers in accordance with Indian corporate law.

What sections should be included in a Buy Sell Agreement Cross Purchase?

1. Parties: Identification of all shareholders/business owners participating in the agreement

2. Background: Context of the agreement, including company details and current ownership structure

3. Definitions: Key terms used throughout the agreement

4. Purpose and Scope: Objectives of the agreement and its application

5. Transfer Restrictions: General restrictions on transfer of shares to third parties

6. Triggering Events: Events that activate the buy-sell provisions (death, disability, retirement, etc.)

7. Purchase Price: Methodology for determining share valuation and purchase price

8. Payment Terms: Structure and timing of payments for share purchases

9. Right of First Refusal: Process and terms for existing shareholders to purchase shares before third-party sales

10. Insurance Provisions: Requirements for life/disability insurance to fund potential purchases

11. Tax Matters: Treatment of tax implications and responsibilities

12. Dispute Resolution: Procedures for resolving conflicts between parties

13. Governing Law: Applicable law and jurisdiction

14. Term and Termination: Duration of agreement and termination conditions

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

What sections are optional to include in a Buy Sell Agreement Cross Purchase?

1. Tag-Along Rights: Optional protection for minority shareholders to join in sale of majority interests

2. Drag-Along Rights: Optional provision allowing majority shareholders to force minority participation in a sale

3. Non-Compete Provisions: Restrictions on competitive activities after share sale, if applicable

4. Family Transfer Exceptions: Special provisions for transfers to family members or trusts

5. Deadlock Resolution: Specific procedures for resolving management deadlocks in closely held companies

6. Put and Call Options: Additional share transfer mechanisms for specific circumstances

7. Foreign Investment Compliance: Required for companies with foreign shareholders or investments

What schedules should be included in a Buy Sell Agreement Cross Purchase?

1. Schedule A - Current Shareholding: Details of current share ownership and distribution

2. Schedule B - Valuation Methodology: Detailed formula and procedures for share valuation

3. Schedule C - Insurance Policies: List of insurance policies and coverage details

4. Schedule D - Company Information: Detailed company information including registration details and assets

5. Appendix 1 - Share Transfer Form: Standard form for executing share transfers

6. Appendix 2 - Valuation Certificate Format: Template for periodic share valuation certificates

7. Appendix 3 - Notice Forms: Standard forms for various notices under the agreement

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

Manufacturing

Technology

Professional Services

Retail

Healthcare

Real Estate

Construction

Financial Services

Family Business

Small and Medium Enterprises

Consulting

Agriculture

Hospitality

Education

Transportation and Logistics

Relevant Teams

Legal

Finance

Corporate Secretarial

Compliance

Risk Management

Board of Directors

Executive Leadership

Tax

Treasury

Corporate Governance

Relevant Roles

Chief Executive Officer

Managing Director

Company Secretary

Chief Financial Officer

Legal Counsel

Business Owner

Partner

Board Director

Shareholder

Corporate Lawyer

Tax Advisor

Financial Controller

Risk Manager

Compliance Officer

Business Development Director

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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