Share Purchase Agreement (SPA) Template (India) — Free Format
A share purchase agreement (SPA) is a contract in which a seller agrees to sell shares in a company to a buyer for a price, with warranties about the company and the shares. It sets out conditions, completion steps, and what happens if the warranties are wrong.
Stamp, registration and e-sign at a glance
The three things to settle before anyone signs this agreement in India.
Payable under the stamp law of the state where it is signed; rates vary by state. Unstamped, it cannot be used as evidence until duty and penalty are paid. Duty on the transfer of shares itself is a uniform central 0.015% of the consideration for delivery-based transfers, paid by the transferor (the parties can shift the cost by contract) and collected by depositories for demat transfers. The state rate check applies only to the SPA as an agreement, which some states charge as an agreement.
Check your state's rateRegistration is not required. Notify the company and file the filings required by the Companies Act, 2013 and FEMA, where applicable.
This agreement can be signed electronically with Aadhaar eSign or a DSC under the Information Technology Act, 2000. Electronic signatures listed in the Act's Second Schedule carry a presumption of reliability. The share transfer form for physical shares and depository instructions follow their own signing rules.
What cannot be e-signedWhat is a Share Purchase Agreement?
An SPA covers a sale of existing shares, as opposed to a subscription for new shares. Shares are "goods" under the Sale of Goods Act, 1930 (Section 2(7)), so the Contract Act and Sale of Goods Act apply, together with the Companies Act, 2013 on transfer of securities and the company's articles of association. The SPA allocates risk: the price, the seller's warranties and indemnities, conditions that must be met before completion, and covenants such as non-solicitation.
When to use it
- Buying or selling a controlling or minority stake in a private limited company
- A founder or investor exiting by selling shares to another investor or the company's promoters
- Acquiring a business by buying the shares of the company that runs it
- Restructuring group holdings by transferring shares between related entities
Key clauses checklist
Make sure your draft covers each of these. Linked clauses open a sample wording with drafting tips.
- Sale shares, price and payment Sample clause
- Conditions precedent (approvals, consents, due diligence)
- Completion mechanics and deliverables
- Seller's warranties
- Indemnity and limits on claims Sample clause
- Limitation of liability Sample clause
- Restrictive covenants Sample clause
- Confidentiality Sample clause
- Stamp duty and costs Sample clause
- Governing law and arbitration Sample clause
Indian law notes
Transfer of shares
Section 56 of the Companies Act, 2013 requires a proper instrument of transfer (Form SH-4 for physical shares) to be delivered to the company with the share certificate, and the transfer to be registered by the company. A private company's articles may restrict transfers (right of first refusal or board consent); check them before signing. For shares in demat form, the transfer is made through delivery instruction to the depository participant. Under Rule 9B of the Companies (Prospectus and Allotment of Securities) Rules, 2014, private companies other than small companies had to dematerialise their securities by 30 June 2025 (unlisted public companies are covered by Rule 9A), so Form SH-4 is now mainly relevant to small companies.
FEMA and foreign investment
A transfer between a resident and a non-resident is governed by the Foreign Exchange Management (Non-debt Instruments) Rules, 2019, with pricing under Rule 21 of those Rules. The resident party files Form FC-TRS through an authorised dealer bank on the FIRMS portal within 60 days of the transfer or of the receipt or remittance of funds, whichever is earlier. Investment from land-border countries also needs government approval under Press Note 3 (2020). Price floors or ceilings can apply, so check before agreeing on a price or deferred payment.
Competition, takeover and tax
A large acquisition may need approval from the Competition Commission of India under the Competition Act, 2002 (Sections 5 and 6); since 10 September 2024 a deal-value threshold of Rs. 2,000 crore can also trigger notification. Buying shares of a listed company may trigger the SEBI takeover regulations. Capital gains, withholding tax and the tax on undervalued unlisted share transfers are governed by income-tax law; get tax advice on the structure and valuation.
Stamp duty on shares
Since 1 July 2020 (the Finance Act, 2019 amendments to the Indian Stamp Act, 1899), duty on off-market and physical share transfers is paid by the transferor at a uniform central rate of 0.015% of the consideration for delivery-based transfers, and depositories collect it for demat transfers; the parties can shift the cost by contract. Separately, some states charge duty on the SPA itself as an agreement, which is where state rates apply.
SHARE PURCHASE AGREEMENT
This Share Purchase Agreement ("Agreement") is made on [Date] at [City]
BETWEEN
1. [Seller Name], [residing at / having its registered office at] [Address] (the "Seller"); and
2. [Buyer Name], [residing at / having its registered office at] [Address] (the "Buyer").
[And, if applicable: 3. [Company Name], CIN [CIN], having its registered office at [Address] (the "Company").]
WHEREAS
A. The Company is engaged in the business of [business] (the "Business").
B. The Seller holds [number] equity shares of face value Rs. [ ] each, representing [ ]% of the paid-up share capital of the Company (the "Sale Shares").
C. The Seller wishes to sell, and the Buyer wishes to buy, the Sale Shares on the terms of this Agreement.
1. SALE AND PURCHASE
Subject to the terms of this Agreement, the Seller shall sell, and the Buyer shall buy, the Sale Shares, free from all encumbrances, with all rights attached to them on and from Completion.
2. PURCHASE PRICE
2.1 The total price for the Sale Shares is Rs. [Amount] (the "Purchase Price").
2.2 The Purchase Price shall be paid as follows: Rs. [ ] on signing, and Rs. [ ] on Completion by bank transfer. [Rs. [ ] shall be held in escrow for [ ] months against warranty claims.]
2.3 Each party shall comply with FEMA pricing and reporting requirements where the transaction involves a non-resident.
3. CONDITIONS PRECEDENT
Completion is conditional on: (a) satisfactory completion of legal, financial and tax due diligence; (b) any consent of the Company's board, shareholders or lenders required under the articles or contracts; (c) [Competition Commission / other regulatory approval, if required]; and (d) no material adverse change in the Business.
4. COMPLETION
4.1 Completion shall take place on [Date / within [ ] days of the conditions being met] (the "Completion Date").
4.2 At Completion, the Seller shall deliver: (a) duly executed share transfer forms (Form SH-4) and the share certificates, or a delivery instruction for dematerialised shares; (b) resignation letters of any nominee director, if agreed; and (c) the statutory registers and books of the Company, as applicable.
4.3 The Buyer shall pay the Purchase Price due at Completion. The Company shall register the transfer and update its register of members.
5. SELLER'S WARRANTIES
The Seller warrants to the Buyer, as at signing and Completion, that: (a) the Seller is the sole legal and beneficial owner of the Sale Shares, which are fully paid and free from any lien, charge or pledge; (b) the Seller has full authority to enter into this Agreement; (c) the Company's financial statements are true and fair; (d) the Company has complied with applicable law, holds all required licences and has paid all taxes due; (e) there is no pending or threatened litigation except as disclosed; and (f) the information given in due diligence is true and not misleading.
6. INDEMNITY AND LIMITS
6.1 The Seller shall indemnify the Buyer against loss arising from a breach of the warranties or from taxes relating to the period before Completion.
6.2 The Seller's total liability for warranty claims shall not exceed [ ]% of the Purchase Price, and claims must be notified within [18] months of Completion, except for fraud and title warranties.
7. RESTRICTIVE COVENANTS
For [ ] years from Completion, the Seller shall not solicit the Company's employees or key customers. [Any non-compete shall be limited to what is reasonable and permitted by law.]
8. CONFIDENTIALITY
Each party shall keep the terms of this Agreement and information about the Business confidential, except where disclosure is required by law.
9. STAMP DUTY AND COSTS
Stamp duty on the transfer of the Sale Shares shall be paid by the Buyer. Each party bears its own advisers' costs.
10. TERMINATION
This Agreement may be terminated by either party if Completion has not occurred by [Long-Stop Date] for reasons not attributable to the terminating party.
11. GOVERNING LAW AND DISPUTES
This Agreement is governed by the laws of India. Disputes shall be referred to arbitration by [a sole arbitrator / three arbitrators] under the Arbitration and Conciliation Act, 1996, seated at [City].
12. GENERAL
This Agreement is the entire agreement between the parties on its subject, may be amended only in writing, and may be signed electronically and in counterparts.
IN WITNESS WHEREOF the parties have signed this Agreement on the date first written above.
Seller: ____________ Buyer: ____________
Name: [Name] Name: [Name]
Witnesses: 1. ____________ 2. ____________ Replace every [placeholder] and delete options that do not apply. Check the stamp duty in your state
How to execute it
From blank template to a signed, stamped and stored contract.
Read the company's articles of association for transfer restrictions, rights of first refusal and any shareholders' agreement.
Complete due diligence and agree on the price, payment structure and the seller's warranties and indemnity limits.
Decide the conditions precedent, such as consents and regulatory approvals, and fix a long-stop date.
Pay stamp duty and sign the SPA; at completion exchange the Form SH-4 and share certificates, or demat instructions, against payment.
Update the register of members, make filings, and for non-resident deals complete FEMA reporting through the bank.
Frequently asked questions
What is the difference between a share purchase agreement and a share transfer form?
The SPA is the commercial contract setting out price, warranties and conditions. The share transfer form (Form SH-4 for physical shares) is the instrument that actually transfers the shares on the company's register. You normally need both.
Is stamp duty payable on a share purchase agreement?
Duty on the transfer of shares is paid by the transferor at a uniform central 0.015% of the consideration for delivery-based transfers (since 1 July 2020), unless the contract shifts the cost. Some states also charge duty on the agreement itself, so check your state for that.
Does the company need to approve a share sale?
A private company's articles often include a right of first refusal or board approval for transfers. Public companies' shares are generally freely transferable under Section 58 of the Companies Act, 2013, but contracts and listing rules may apply. Check the articles first.
Do I need RBI approval to sell shares to a foreign buyer?
Most such transfers do not need prior RBI approval, but they must follow the FEMA pricing rules and be reported through an authorised dealer bank. Some sectors need government approval. Seek advice before agreeing terms.
Can the SPA be signed electronically?
Yes, an SPA is not listed in the First Schedule to the IT Act, so Aadhaar eSign or a DSC can be used. Physical share transfer forms and demat instructions follow their own rules.
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