StartupGrants India

Share Purchase Agreement (SPA)

Acquire or sell equity in a private company with a robust SPA covering reps, warranties, and indemnities

What is Share Purchase Agreement (SPA)?

A Share Purchase Agreement governs the acquisition of equity in a private company. We draft and review SPAs for acquisitions, founder buy-outs, secondary stake sales, and M&A transactions — ensuring reps and warranties, indemnities, and conditions precedent protect your interests.

A Share Purchase Agreement (SPA) is the primary document in an equity acquisition — the buyer purchases shares from the seller (which may be a founder, investor, or the company issuing new shares). Unlike a Shareholders Agreement, the SPA is a transaction document: it sets out the consideration, the conditions that must be met before closing, what the seller represents and warrants about the company, what happens if those representations are false (indemnities), and the process for completing the transfer. Key provisions include: purchase price and payment mechanism, representations and warranties by the seller (title to shares, company's financial position, material contracts, compliance), indemnity obligations if a warranty is breached, conditions precedent (board approval, regulatory approval, third-party consents), and the completion mechanics (share transfer form, board resolutions, share certificate). In India, shares are transferred by a validly executed and stamped share transfer form (Form SH-4) and updated registers.

Who Needs Share Purchase Agreement (SPA)?

Founders selling secondary stakes or exiting, investors acquiring equity from existing shareholders, companies structuring a management buy-out, and acquirers in an M&A transaction targeting a private Indian company.

What's Included

  • Full title warranty confirming the seller owns the shares free of encumbrances
  • Business warranties covering financials, material contracts, IP, and compliance
  • Indemnity mechanism with survival period and claim cap
  • Conditions precedent (board resolution, regulatory approvals) mapped and tracked
  • Completion mechanics including share transfer form, register updates, and board resolutions

⚠️ Penalty for Non-Compliance

Entering an acquisition without adequate reps and warranties leaves the buyer with no recourse if the company's financials, contracts, or compliance are not as represented.

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How It Works

  1. 1

    Review the cap table and deal structure

    We review the cap table, confirm the seller's title to the shares, and map any conditions precedent.

  2. 2

    Draft or review the SPA

    We draft a full SPA (or review the buyer's draft) covering purchase price, reps and warranties, indemnities, conditions precedent, and completion mechanics.

  3. 3

    Due diligence support

    We assist with the legal due diligence on the company, flagging risks that should be reflected as specific indemnities.

  4. 4

    Negotiation and completion

    We support the negotiation of final terms and manage the completion — share transfer form, board resolutions, share certificate, and register updates.

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Documents Required

Items marked Required are mandatory; others are situational.

Company documents

  • Cap table (current)Required
  • Certificate of incorporation and MOA/AOARequired
  • Financial statements (last 2–3 years)Required
  • Existing SHA or investment agreement

Transaction

  • Agreed heads of terms or term sheet
  • Regulatory approval documents (if FDI involved)
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Fees & Pricing

Fees

Government fee

Stamp duty on Form SH-4 at 0.015% of market value; ROC intimation of transfer is nominal

Varies

Professional fee

Quoted after reviewing the cap table, deal size, and transaction complexity

Varies

* Government fees may vary. GST applicable on professional fees. Final pricing confirmed after review.

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Frequently Asked Questions

What is a representation and warranty?

A representation is a statement of fact made by the seller about the company. A warranty is a contractual promise that the statement is true. If a warranty is false, the buyer has a claim for breach.

What is a warranty disclosure letter?

The seller discloses known exceptions to the warranties in a disclosure letter. A disclosed matter cannot be the basis of a warranty claim.

How is a share transfer completed in India?

The seller executes a share transfer form (Form SH-4), the buyer pays the consideration, and the board approves the transfer. The company updates its register of members and issues a new share certificate.

Is stamp duty payable on the share transfer form?

Yes. Form SH-4 attracts stamp duty at 0.015% of the market value of shares being transferred under the Indian Stamp Act.

What is a condition precedent?

A condition that must happen before the parties are obliged to complete — for example, shareholder approval or regulatory consent. If not met by the long-stop date, either party can terminate.

Can a SPA be structured as a deferred consideration deal?

Yes. Common structures include earn-out (portion of price contingent on future performance), deferred payment tranches, and escrow held back against warranty claims.

Detailed guides for Share Purchase Agreement (SPA)

Go deeper on any part of the process.

Process

Step-by-step timeline and what happens at each stage.

Checklist

Every document to keep ready, and what's mandatory vs. optional.

Fees

Transparent breakdown of government and professional fees.

FAQs

Answers to the questions founders ask most often.

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Share Purchase Agreement (SPA)

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