Share Purchase Agreement in India: Template, Clauses and Local Law (2026)

What is a share purchase agreement in India? A share purchase agreement (SPA) in India is the contract under which a buyer purchases shares in an Indian company from an existing shareholder. It sets the price, the conditions that must be met before completion, the promises each side makes about the company and the shares, and what happens if those promises turn out to be wrong. It is the central document in buying a stake in, or the whole of, a private limited company. An SPA is a transfer of existing shares from a seller to a buyer, which is different from a subscription agreement, where the buyer puts new money in and the company issues fresh shares. In an SPA the money goes to the selling shareholder; the company's cap table changes hands rather than expands. This article is general guidance, not legal advice. Company, tax, stamp and exchange-control rules change and have fine print, so have a qualified Indian professional review any SPA before you rely on it. Last verified October 2026. ## The Indian legal frame An Indian SPA sits inside several laws: - Companies Act, 2013 governs how shares are transferred, including the instrument of transfer in Form SH-4 and the board's role in registering the transfer.

• Indian Contract Act, 1872 governs the agreement itself: offer, consideration, free consent and enforceability.
• Indian Stamp Act, 1899 sets stamp duty on the share transfer.
• FEMA (Foreign Exchange Management Act, 1999) and the RBI rules apply when a non-resident buys or sells, including pricing guidelines and reporting.
• Income-tax Act, 1961 drives capital gains and, for unlisted shares, fair-value rules. ## Stamp duty and the SH-4 transfer Since 1 July 2020, stamp duty on the transfer of shares (securities other than debentures) on a delivery basis is 0.015% of the consideration, and the rate is uniform across India. The transfer of physical shares is effected on Form SH-4, delivered to the company with the share certificates, and the board registers the transfer. Sources differ on whether duty is on the consideration stated in the instrument or the higher of consideration and market value, and on whether the buyer or seller bears it, so agree who pays in the SPA and confirm with the state stamp office. <!-- [VERIFY] valuation base (consideration vs higher-of) and payer per current stamp rules --> Demat note: rules require shares of many private companies to be held in dematerialised form, with a compliance deadline that several sources place at 30 June 2026. If that rule applies to your company, transfers may need to go through demat rather than a physical SH-4. Check the current Companies (Prospectus and Allotment of Securities) Rules or the MCA before proceeding. <!-- [VERIFY] current status of Rule 9B demat requirement for private companies as of October 2026 --> ## Share purchase agreement template (India) skeleton This is a skeleton of the main clauses, not a complete contract. ``` SHARE PURCHASE AGREEMENT This Agreement is made on [DATE] at [place] BETWEEN: [SELLER], [address] ("Seller") [BUYER], [address] ("Buyer") [and the COMPANY, [CIN], [address]] 1. DEFINITIONS AND INTERPRETATION "Sale Shares" means [N] equity shares of [face value] each, being [X]% of the Company. [Define Completion, Conditions, Warranties, etc.] 2. SALE AND PURCHASE The Seller sells and the Buyer buys the Sale Shares, free from encumbrances, with all rights attaching, for the Consideration. 3. CONSIDERATION The total consideration is [AMOUNT], payable [on Completion / with [amount] in escrow / in tranches]. 4. CONDITIONS PRECEDENT Completion is conditional on [board and shareholder approvals, third-party consents, no material adverse change, regulatory approvals including FEMA where applicable, due diligence]. 5. COMPLETION At Completion the Seller delivers duly executed Form SH-4, share certificates, resignations/appointments as agreed; the Buyer pays the Consideration; the board registers the transfer. 6. SELLER WARRANTIES The Seller warrants title to the Sale Shares and gives warranties on the Company (accounts, tax, litigation, compliance, assets, contracts, employees) as set out in Schedule [X], subject to the Disclosure Letter. 7. BUYER WARRANTIES The Buyer warrants capacity, authority and (where relevant) source and lawfulness of funds under FEMA. 8. INDEMNITY The Seller indemnifies the Buyer for losses from breach of warranty and identified risks, subject to agreed caps, time limits and a de minimis threshold. 9. RESTRICTIVE COVENANTS [Non-compete / non-solicit by the Seller for [N] years, to the extent enforceable.] 10. TAX Allocation of capital gains and withholding (including on payments to non-residents), and stamp duty responsibility. 11. GOVERNING LAW AND DISPUTES Governed by the laws of India; disputes resolved by [arbitration seat at [place] under [rules] / courts at [place]]. Signed Seller: ______ Signed Buyer: ______ [Company: ____]

- **Warranties and the disclosure letter (clause 6).** The buyer wants broad warranties about the company; the seller wants to limit them and to disclose against them, because a disclosed problem is not a breach. The disclosure letter is where the real negotiation happens.
- **Indemnity, caps and time limits (clause 8).** The seller wants a low cap, a short survival period and a de minimis floor; the buyer wants a high cap for fundamental matters such as title and tax, and longer survival for tax. Split general and fundamental warranties with different caps.
- **Tax (clause 10).** On unlisted shares, capital gains and fair-value rules bite, and payments to non-residents may need withholding. Agree who bears stamp duty and who manages any withholding or lower-rate certificate.
- **Restrictive covenants (clause 9).** Keep non-compete terms reasonable in scope, duration and geography, because Indian law limits restraints of trade and overbroad covenants may not be enforced. ## Common mistakes to avoid - Treating an SPA like a subscription; they move money and shares differently.
- Ignoring FEMA pricing and reporting when a non-resident is on either side.
- Forgetting the SH-4 and board registration, so the transfer is not perfected.
- No cap or survival limit on warranties, leaving the seller exposed indefinitely.
- Overlooking the demat requirement where it now applies. ## Where a contract workspace helps A template gets you a sound Indian SPA skeleton. The ongoing work is everything after: keeping warranties, caps and conditions consistent across the SPA, the disclosure letter and the ancillary documents, tracking each condition precedent and completion deliverable, watching compliance items such as SH-4 filing, stamp duty and FEMA reporting, and finding the right version during a dispute. Drafting, reviewing, tracking and governing an Indian share purchase can also live in one AI workspace tuned to how your company does deals. Such a workspace can start from your SPA template, link the clauses so a change to the cap flows through indemnity and schedule, show compliance dates such as SH-4 filing and FEMA reporting on one timeline, and keep every version together. [Adira](https://adiralaw.com) is one tool built on that single-workspace approach. The template alone is enough to start a fair SPA; a workspace simply makes drafting, review and tracking one connected job.