Shareholders Agreement (India) by OLL
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SHAREHOLDERS AGREEMENT
BETWEEN
____________________
AND
RE: Shares of ----------------------Pvt. Ltd.
THIS AGREEMENT made the ____ day of ______, 2003 BETWEEN MR_B residing at _____________________ (hereinafter referred to as "A") (which expression shall, unless repugnant to the context or meaning hereof, mean and include his heirs, executors, administrators and assigns) of the First Part.
And
MR. B residing at __________________________(hereinafter referred to as "B") (which expression shall, unless repugnant to the context or meaning hereof, mean and include his heirs executors, administrators and assigns) of the Second Part.
And
________________________ (P) LTD., a Company incorporated under the Companies Act, 1956 and having its registered office at _____________________ herein represented by its ___________ (hereinafter referred to as "XYZ") which expression shall, unless repugnant to the context or meaning hereof, include its successors and assigns) of the Third Part;
WHEREAS:
A. A and B hereto have agreed to jointly manage a company in India named "XYZ Pvt Ltd ";
B. A and B have agreed to become Equity Partners by investing in the shares of the Company subject to the condition that they shall enter into a Shareholders Agreement in terms of these presents;
C. The Company "XYZ PVT. LTD. " has been requested to, and has agreed to, join in the execution of these presents and to take this Agreement on record so that it is aware of the rights and obligations of A AND B, the parties hereto and ensure that they comply with the same;
D. The parties hereto are desirous of recording the terms and conditions of their Agreement in writing;
NOW IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES HERETO AS FOLLOWS:-
1.
a. A and B shall jointly invest in the Company which is an existing company limited by shares under the Companies Act, 1956 and known as "XYZ PVT LTD".
b. The registered office of the Company shall be situate at ________________, or at such other places as may be mutually agreed upon between the parties in writing.
c. The Company shall carry on the business of running and managing restaurants and (Description of the business and complete address), either by itself or through other agencies or company industries and may carry on any other business as may be decided by B hereto and shall ensure that no other business activity is undertaken by the Company at any time without the consent of A hereto.
2. The authorised share capital of the Company is Rs.________/- (Rupees ___________________ only) consisting of ______________ (________) equity shares of Rs.10/- (Rupees ten) each.
3. The subscription by A hereto to the aforesaid authorised share capital of the Company shall be 1,00,000 (One lakh) equity shares of Rs.10/- (Rupees ten only) and the subscription by B to the aforesaid authorised share capital of the Company shall be 1,00,000 (One lakh) equity shares of Rs.10/-(Rupees ten only).
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This is a standard shareholders agreement template for a private company, specifically designed for two primary equity partners. It outlines the management structure, share transfer restrictions, board representation, and financial arrangements including loan repayments and profit distribution.
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About this template
What is this template?
This is a tripartite agreement between two individuals and their jointly owned company to govern corporate governance and debt servicing. It includes specific clauses for the repayment of a Rs. 1.10 Crore bank loan and provides 12% interest on member-contributed capital. It is not a simple share purchase agreement as it mandates operational control and profit diversion.
When should you use it?
Use this when establishing a private limited company in India where one partner is providing significant capital to settle existing liabilities. If the company is not yet incorporated or does not have existing debt, a standard Mutual NDA or a basic Founder Agreement would be more appropriate.
What's inside
| Clause | Name | What it does |
|---|---|---|
| 3 | Share Capital and Subscription | Each party subscribes to 1,00,000 equity shares at Rs.10 per share, establishing equal initial ownership. |
| 5 | Board of Directors | A may nominate two directors while B may nominate three or more, with B serving as Chairperson. |
| 9 | Transfer of Shares | A party must offer shares to the other in writing, allowing 15 days for acceptance before selling to third parties. |
| 10 | Working Capital and Loan Repayment | Profits attributable to A are diverted to repay a Rs. 1,10,00,000 bank loan and capital brought in by B. |
| 11 | Interest on Capital | B is entitled to 12% annual interest on any additional sums brought into the business. |
| 15 | Breach and Termination | A party can terminate the agreement if a breach is not rectified within 60 days of written notice. |
| 18 | Arbitration | Disputes are referred to arbitration in Bangalore under the provisions of the Arbitration and Conciliation Act, 1996. |
Who it's for
- equity partners jointly managing a company in India incorporated under the Companies Act 1956
- shareholders using company profits to repay specific bank loans of over one crore rupees
- investors requiring specific board nomination rights including a right for one party to nominate more directors
- partners establishing a restaurant management business with fixed 12% interest on additional capital
How long it runs and how it's signed
Law it's drafted under
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