THIS AGREEMENT is made on this _____ day of _________, 20.
BETWEEN
THE COMPANY: _________________________ (hereinafter referred to as “the Company”), a company incorporated under the Companies Act, 2013, having its registered office at _________________________________, and listed on _________________________ Stock Exchange(s), represented by its authorized signatory, of the FIRST PART;
AND
THE SHAREHOLDERS: The persons whose names and details are set out in Schedule A hereto (hereinafter collectively referred to as “the Shareholders” and individually as “a Shareholder”), of the SECOND PART.
The Company and the Shareholders are collectively referred to as “the Parties” and individually as “a Party.”
RECITALS
WHEREAS the Company has completed its Initial Public Offering and its equity shares are now listed and traded on recognised stock exchanges in India;
WHEREAS the Shareholders are significant shareholders of the Company holding shares as detailed in Schedule A;
WHEREAS the Parties acknowledge that as a listed company, they are subject to securities laws, SEBI regulations, and listing obligations;
WHEREAS the Shareholders wish to regulate their rights and obligations while ensuring full compliance with applicable securities regulations;
WHEREAS the Shareholders desire to establish mechanisms for orderly exits and transfers while protecting their collective interests;
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and subject to applicable securities laws, the Parties agree as follows:
ARTICLE 1: DEFINITIONS AND INTERPRETATION
1.1 Definitions
In this Agreement, unless the context otherwise requires:
“SEBI” means the Securities and Exchange Board of India and includes its successors.
“Listing Regulations” means the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended from time to time.
“Insider Trading Regulations” means the SEBI (Prohibition of Insider Trading) Regulations, 2015, as amended from time to time.
“Unpublished Price Sensitive Information” or “UPSI” means any information relating to the Company which is not generally available and which, if published, is likely to materially affect the price of securities.
“Trading Window” means the period during which designated persons and insiders are permitted to trade in the Company’s securities as per the Company’s Code of Conduct for Insider Trading.
“Drag-Along Sale” means a transaction where the majority shareholders compel minority shareholders to join in the sale of the Company or their shareholding.
“Significant Shareholder” means any Shareholder holding five per cent or more of the paid-up share capital of the Company.
1.2 Interpretation
This Agreement shall be read and construed in harmony with the Companies Act, 2013, SEBI regulations, and listing requirements. In case of any conflict, statutory provisions shall prevail.
ARTICLE 2: COMPLIANCE WITH SECURITIES REGULATIONS
2.1 Regulatory Compliance
All Shareholders acknowledge and agree to comply with:
(a) The Companies Act, 2013, and rules made thereunder;
(b) SEBI Act, 1992, and all regulations issued thereunder;
(c) Listing Regulations applicable to the stock exchanges where the Company is listed;
(d) Any other applicable laws, rules, and regulations governing listed companies.
2.2 Disclosure Obligations
2.2.1 Significant Shareholders shall disclose their shareholding to the Company and stock exchanges in accordance with Listing Regulations within the prescribed timelines.
2.2.2 Any acquisition or disposal of shares that results in a change of two per cent or more in shareholding shall be promptly disclosed to the Company and stock exchanges as required by law.
2.2.3 Shareholders shall file necessary disclosures under Regulation 29 of the Takeover Regulations when their holding reaches or crosses specified thresholds.
2.3 Takeover Code Compliance
Shareholders acknowledge that any acquisition of shares or voting rights shall be subject to the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. No Shareholder shall act in concert to acquire shares in violation of these regulations.
2.4 Code of Conduct
All Shareholders who are designated persons under the Company’s Code of Conduct for Prevention of Insider Trading shall strictly adhere to such code and obtain necessary pre-clearances before trading.
ARTICLE 3: INSIDER TRADING RESTRICTIONS
3.1 Prohibition on Insider Trading
3.1.1 No Shareholder shall trade in the securities of the Company while in possession of Unpublished Price Sensitive Information.
3.1.2 Shareholders who are promoters, directors, or key managerial personnel shall be deemed to be insiders and must comply with all insider trading restrictions.
3.1.3 Sharing of UPSI among Shareholders or with third parties is strictly prohibited except as permitted under securities laws and on a need-to-know basis.
3.2 Trading Window Restrictions
3.2.1 Designated Shareholders shall trade in Company securities only during Trading Windows announced by the Company.
3.2.2 The Trading Window shall be closed during periods when UPSI exists, including:
(a) Declaration of financial results (quarterly, half-yearly, annual);
(b) Dividend announcements;
(c) Material events such as mergers, acquisitions, or restructuring;
(d) Any other event as determined by the Compliance Officer.
3.2.3 The Trading Window shall typically remain closed from the end of each quarter until forty-eight hours after the declaration of financial results.
3.3 Pre-Clearance Requirements
3.3.1 Designated Shareholders must obtain pre-clearance from the Company’s Compliance Officer before executing any trade exceeding the threshold value as specified in the Company’s insider trading code.
3.3.2 Pre-clearance applications must be submitted at least five working days before the proposed transaction.
3.3.3 Pre-clearance, once granted, shall be valid for seven days from the date of approval.
3.4 Disclosure of Trading
Shareholders who execute trades must disclose such transactions to the Company within two working days, and the Company shall make necessary disclosures to stock exchanges as required.
ARTICLE 4: TRANSFER AND SALE OF SHARES
4.1 General Transfer Rights
Subject to compliance with securities laws and this Agreement, Shareholders have the right to transfer their shares through:
(a) Open market transactions on stock exchanges;
(b) Off-market transfers in accordance with depository regulations;
(c) Block deals or bulk deals as per stock exchange mechanisms;
(d) Any other method permitted under applicable laws.
4.2 Pre-Notification
Significant Shareholders intending to sell shares representing more than one per cent of total shareholding in a single transaction or series of transactions must notify other Significant Shareholders at least fifteen days in advance.
4.3 Lock-in Compliance
Shares subject to any lock-in period as per SEBI regulations or listing agreement shall not be transferred during such lock-in period except as permitted by law.
4.4 Right of First Refusal
If any Shareholder wishes to transfer shares through an off-market transaction to a third party, other Significant Shareholders shall have a right of first refusal to acquire such shares on the same terms, exercisable within twenty days of notice.
ARTICLE 5: DRAG-ALONG RIGHTS
5.1 Applicability of Drag-Along
If Shareholders holding collectively seventy-five per cent or more of the total shareholding covered under this Agreement (the “Majority Shareholders”) receive a bona fide offer from a third party to purchase their shares, they may exercise drag-along rights.
5.2 Drag-Along Process
5.2.1 Majority Shareholders shall provide written notice to minority shareholders (the “Minority Shareholders”) containing:
(a) Details of the proposed transaction, including purchase price and terms;
(b) Identity of the proposed purchaser;
(c) Proposed timeline for completion;
(d) Any conditions precedent to the transaction.
5.2.2 The notice period shall be at least thirty days before the proposed closing date.
5.3 Minority Shareholder Obligations
Upon receipt of a drag-along notice, Minority Shareholders shall be obligated to:
(a) Sell their shares on the same terms and conditions as the majority shareholders;
(b) Execute all necessary documents and agreements;
(c) Provide all representations and warranties consistent with those provided by Majority Shareholders;
(d) Take all actions reasonably necessary to consummate the transaction.
5.4 Price and Terms
Minority Shareholders shall receive the same price per share and substantially the same terms as Majority Shareholders, ensuring equal treatment.
5.5 Regulatory Compliance
The exercise of drag-along rights shall be subject to:
(a) Compliance with SEBI Takeover Regulations;
(b) Obtaining necessary regulatory approvals;
(c) Compliance with stock exchange requirements;
(d) Any other applicable legal requirements.
5.6 Exclusions from Drag-Along
Drag-along rights shall not apply to:
(a) Transfers among promoter group entities;
(b) Transactions during lock-in periods prohibited by law;
(c) Transfers pursuant to statutory schemes of arrangement.
ARTICLE 6: TAG-ALONG RIGHTS
6.1 Tag-Along Entitlement
If any Significant Shareholder proposes to sell shares to a third party through an off-market transaction, other Shareholders shall have the right to participate in such sale proportionately.
6.2 Tag-Along Notice
The selling Shareholder shall notify other Shareholders at least twenty-one days before the proposed transaction, providing full details of the terms and conditions.
6.3 Exercise of Tag-Along
Shareholders wishing to exercise tag-along rights must notify the selling Shareholder within fourteen days of receiving notice, specifying the number of shares they wish to sell.
ARTICLE 7: INFORMATION RIGHTS AND CONFIDENTIALITY
7.1 Information Access
Shareholders acknowledge that information rights as a listed company are governed by Listing Regulations and insider trading norms, not private contractual arrangements.
7.2 Confidential Information
Shareholders who receive confidential information about the Company shall:
(a) Maintain strict confidentiality;
(b) Do not use such information for personal trading.
(c) Not disclose such information except as required by law.
7.3 Public Disclosures
All material information shall be disclosed to stock exchanges and public simultaneously, ensuring no selective disclosure to certain shareholders.
ARTICLE 8: REPRESENTATIONS AND WARRANTIES
8.1 Company Representations
The Company represents that:
(a) It complies with all listing obligations;
(b) All public disclosures are accurate and complete;
(c) There are no undisclosed material events.
8.2 Shareholder Representations
Each Shareholder represents that:
(a) They understand securities laws and insider trading regulations;
(b) They will comply with all applicable regulations;
(c) Their shares are free from undisclosed encumbrances.
ARTICLE 9: GENERAL PROVISIONS
9.1 Term and Termination
This Agreement shall remain in force until terminated by mutual written consent of Shareholders holding ninety per cent of shares covered under this Agreement.
9.2 Amendment
This Agreement may be amended bythe written consent of Shareholders holding eighty per cent of shares, provided such amendment does not violate any securities laws.
9.3 Governing Law and Jurisdiction
This Agreement shall be governed by the laws of India. Disputes shall be subject to arbitration in _____________, and courts at _____________ shall have exclusive jurisdiction.
9.4 Severability
If any provision is held invalid or unenforceable, the remaining provisions shall continue in full force.
9.5 Notices
All notices shall be in writing and delivered to the addresses specified in Schedule A.
IN WITNESS WHEREOF, the Parties have executed this Agreement on the date first written above.
FOR THE COMPANY:
Signature: _____________________
Name:
Designation:
Date:
FOR THE SHAREHOLDERS:
As per signatures in Schedule A
SCHEDULE A: SHAREHOLDER DETAILS
[Table containing shareholder names, addresses, contact details, and current shareholding]
SCHEDULE B: PREFERENCE SHARE DETAILS
[Table containing preference share details, conversion terms]