Agreement for Promoting a Company (India) by OLL
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AGREEMENT FOR PROMOTING A COMPANY
AGREEMENT
BETWEEN
______________________________
AND
______________________________
TO PROMOTE A COMPANY TO BE KNOWN AS ____________
THIS AGREEMENT made at _______ the ____ day of _____________, 2000 BETWEEN __________________________ LTD., a Company incorporated under the Companies Act, 1956 having its registered office at ______________ (Hereinafter referred to as "A" which expression shall unless repugnant to the context or meaning thereof include its successors and assigns) of the ONE PART AND MR. B, Resident of India residing at __________________________ (Hereinafter referred to as "B" which expression shall unless repugnant to the context or meaning thereof include his/her heirs and legal representatives) of the OTHER PART;
WHEREAS:-
A. The parties hereto have agreed to jointly promote and incorporate a company in India to carry on the business of ___________________;
B. The parties hereto have agreed to subscribe to the shares of such company subject to the condition that they shall enter into an Agreement in terms of these presents;
NOW IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES HERETO AS FOLLOWS:-
1.
a. The parties shall jointly promote forms and incorporate a private company limited by shares under the Companies Act, 1956 or any statutory modification or re-enactment thereof for the time being in force under the name ________________ (Hereinafter called "the Company").
b. The registered office of the Company shall be situated in Mumbai at ____________________ or at such other place as may be mutually agreed upon between the parties in writing.
c. The Company shall, upon its incorporation, carry on the business of ___________________. The parties hereto shall ensure that no other business activity is undertaken by the Company at any time without the prior written consent of both parties hereto.
2. The Memorandum and Articles of Association of the Company shall be in a form mutually agreed upon in writing between the parties hereto. The Memorandum and Articles of Association shall include such of the provisions contained herein as can be lawfully included therein. Any alteration of the Memorandum or Articles of Association of the Company shall be made only with the prior written consent of the parties hereto.
3.
a. The authorised share capital of the Company upon incorporation, shall be Rs._______/- (Rupees __________________only) consisting of _______ equity shares of each. The paid-up share capital of the Company upon incorporation shall be Rs._________/- (Rupees ____________________only) consisting of ____ equity shares of _______ each fully paid. The initial subscription by the parties hereto to the aforesaid paid-up share capital of the Company shall be Rs.________/- (Rupees _______________ only) each. The issue of any further capital by the Company shall be made at each time and in such manner as is mutually agreed upon between the parties from time to time.
4.
a. "A" shall subscribe for in cash at ________ and hold _________ of the total issued, subscribed and paid-up equity capital of the Company for the time being and from time to time.
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This template is an agreement between two parties to jointly promote and incorporate a private limited company in India. It outlines the initial share capital subscription, board of directors composition, management rights, and restrictions on the transfer of shares. The document also includes provisions for dispute resolution via arbitration and confidentiality obligations between the promoters.
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About this template
What is this template?
This document is a pre-incorporation agreement that binds two promoters to the specific terms of a future company's governance and capital structure. It contains specific protections for minority shareholders including a 26% shareholding threshold for termination and a three-year dividend prohibition. It is not a standard Shareholders' Agreement for an existing company, as it focuses on the act of promotion and incorporation.
When should you use it?
Use this template when two parties intend to jointly register a new company in India and want to define their equity stakes and board rights before filing the Memorandum of Association. Use a Shareholders' Agreement instead if the company is already incorporated and you are regulating the ongoing relationship between existing members.
What's inside
| Clause | Name | What it does |
|---|---|---|
| 1 | Incorporation | Parties agree to incorporate a private company limited by shares in Mumbai under the Companies Act 1956. |
| 3 | Authorised share capital | Sets the initial authorised and paid-up share capital figures and requires mutual agreement for any further capital issues. |
| 6 | Board of Directors | Restricts the board to between four and eight directors and grants equal representation while shareholding remains above 25%. |
| 6(e) | Managing Director | Appoints Party B as the first Managing Director for a ten-year term, renewable for another ten years. |
| 8(b) | Special Resolutions | Mandates that any matter permitted by the Articles or Companies Act 1956 be passed as a special resolution. |
| 8(c) | Dividend Restriction | Prohibits the declaration of dividends for at least three years from the date of the company's incorporation. |
| 10 | Transfer of shares | Imposes a lock-in period preventing any share transfers or encumbrances for five years following incorporation. |
| 12 | Confidentiality | Prohibits disclosure of trade secrets or business information pertaining to the parties, the Company, or its clients. |
| 16 | Termination | Triggers automatic termination if either party's shareholding falls below 26% of the issued equity capital. |
| 19 | Arbitration | Requires disputes to be referred to two arbitrators in Bombay under the Arbitration and Conciliation Act 1996. |
Who it's for
- a corporate entity and an Indian resident forming a joint venture company in India
- promoters requiring a five-year lock-in period on share transfers after company incorporation
- partners establishing a board with equal representation and mandatory special resolutions for all shareholder actions
How long it runs and how it's signed
Law it's drafted under
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