FOR PROMOTING A COMPANY
PROMOTE A COMPANY TO BE KNOWN AS ____________
AGREEMENT made at _______ the ____ day of _____________, 2000 BETWEEN __________________________
LTD., a Company incorporated under the Companies Act, 1956 having its
registered office at ______________ (Hereinafter referred to as "A"
which expression shall unless repugnant to the context or meaning thereof include
its successors and assigns) of the ONE PART AND MR. B, Resident of India
residing at __________________________ (Hereinafter referred to as
"B" which expression shall unless repugnant to the context or meaning
thereof include his/her heirs and legal representatives) of the OTHER PART;
A. The parties hereto
have agreed to jointly promote and incorporate a company in India to carry on
the business of ___________________;
B. The parties hereto
have agreed to subscribe to the shares of such company subject to the condition
that they shall enter into an Agreement in terms of these presents;
IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES HERETO AS FOLLOWS:-
a. The parties shall
jointly promote forms and incorporate a private company limited by shares under
the Companies Act, 1956 or any statutory modification or re-enactment thereof
for the time being in force under the name ________________ (Hereinafter called
b. The registered office
of the Company shall be situated in Mumbai at ____________________ or at such
other place as may be mutually agreed upon between the parties in writing.
c. The Company shall,
upon its incorporation, carry on the business of ___________________. The
parties hereto shall ensure that no other business activity is undertaken by
the Company at any time without the prior written consent of both parties
2. The Memorandum and
Articles of Association of the Company shall be in a form mutually agreed upon
in writing between the parties hereto. The Memorandum and Articles of Association
shall include such of the provisions contained herein as can be lawfully
included therein. Any alteration of the Memorandum or Articles of Association
of the Company shall be made only with the prior written consent of the parties
a. The authorised share
capital of the Company upon incorporation, shall be Rs._______/- (Rupees
__________________only) consisting of _______ equity shares of each. The
paid-up share capital of the Company upon incorporation shall be Rs._________/-
(Rupees ____________________only) consisting of ____ equity shares of _______
each fully paid. The initial subscription by the parties hereto to the
aforesaid paid-up share capital of the Company shall be Rs.________/- (Rupees
_______________ only) each. The issue of any further capital by the Company
shall be made at each time and in such manner as is mutually agreed upon
between the parties from time to time.
a. "A" shall
subscribe for in cash at ________ and hold _________ of the total issued,
subscribed and paid-up equity capital of the Company for the time being and
from time to time.
b. "B" shall
subscribe for in cash at par and hold________-of the total issued, subscribed
and paid-up equity capital of the Company for the time being and from time to
5. Unless the parties hereto
shall have otherwise accorded their prior consent in writing in that behalf,
any further issue of capital by the Company shall be made in such manner as to
ensure that the participation by each of the parties hereto in the total issued
and paid-up equity share capital of the Company for the time being shall,
subject to clause 10 and 11 hereof, at all times be and remain in the same
proportion as that provided in clause 4 above.
a. The Board of
Directors of the Company shall consist of not less than four not more than
b. The day to day
management of the Company shall be looked after by the Managing Director. Any
major acquisition of property, substantial expansion of business activities or
diversification or matters of policy shall be with the prior consent of
c. So long as
"A" and "B" each hold not less than 25% of the paid-up
equity capital of the Company for the time being, they shall at all times have
equal representation on the Board of Directors of the Company. "A"
and "B" shall be entitled at any time to remove any of their
representatives on the Board by written notice and to appoint another or others
in their place.
d. So long as
"A" holds not less than 26% of the paid-up equity shares capital of
the Company for the time being it shall be entitled to nominate the Chairman of
the Board. The Chairman of the Board shall also be the Chairman of all general
meetings of the Company. The Chairman shall not have a casting vote, in the
case of and equality of votes, both at Board Meetings and general meetings.
e. "B" shall
be the first Managing Director of the Company and shall be so appointed by the
Board of Directors of the Company as such for an initial period of ten years
renewable for a further period of ten years. The Company shall enter into an
agreement with "B" setting out of the terms and conditions of his/her
appointments as Managing Director, including his/her remuneration and
perquisites, within two months from the date of its incorporation. The
Agreement shall be in a form mutually agreed upon between the parties in
writing. No alteration or modification of each Agreement with the Managing
Director shall be made without the prior written consent of "A".
anything to the contrary hereinabove contained, B''s appointment as Managing
Director shall cease and be terminated upon his/her shareholding in the Company
being reduced for any reason whatsoever below 26% of the paid-up equity share
capital of the Company for the time being.
g. None of the Directors
of the Company shall be required to hold any qualification shares.
7. Both parties hereto
jointly and severally shall vote and act as members of the Company and with
respect to the shares of the Company held by them so as to ensure that
Directors of the Company held by them so as to ensure that Directors of the
Company are at all times appointed and maintained in office in conformity with
the provisions of clause 6 hereof. If at any time the provisions of clause 6
are not fully complied with the parties hereto jointly and severally agree to
promptly take all necessary steps to ensure that the provisions of clause 6
hereof are fully implemented in letter and spirit.
a. No resolution shall
be passed or be deemed to be passed at any meeting of the Board of Directors of
the Company or by circulation unless it has received the affirmative vote of
"A" and "B" or in their absence at least one of the
representatives on the Board of "A" and "B" respectively.
b. Any act, matter or
thing or any resolution which, under the Articles of Association of the Company
or the Companies Act, 1956, is permitted or required to be done or passed by
the Company in general meeting shall invariably be done by or passed as a
special resolution of the shareholders of the Company in general meeting unless
the said Act expressly requires such act, matter or thing to be done by a
resolution to be passed as an ordinary resolution of the shareholders in
c. It is expressly
agreed and declared that no dividend, interim or final, shall be declared or recommended
by the Company for a period of not less than three years from the date or its
incorporation and during such period the profits of the Company after tax, if
any, shall be transferred to "Reserves and Surplus".
a. The Auditors of the
Company shall be such firm of Chartered Accountants as shall be approved in
writing by both the parties hereto.
b. The Legal Advisors of
the Company shall be:-
c. Neither the Auditors
of the Company nor the Legal Advisors of the Company shall be changed without
the prior written consent of both the parties hereto.
10. Neither party hereto
shall sell or transfer his shares in the Company or any of them for a period of
at least 5 years from the date of incorporation of the Company. Thereafter any
sale or transfer of shares in the Company by either party shall be as provided
in clause 11. Further neither party hereto shall, create any charge, lien
pledge or other encumbrances on or in respect of his share in the Company or
any of them without the prior written consent of the other. If at any time
during the continuance of this Agreement either party hereto desires to sell or
transfer all or any of the shares held by him in the Company he shall do so
strictly in accordance with the provisions hereinafter provided.
a. If either party
desires at any time after 5 years from the date of incorporation of the Company
to sell the whole or part of his/her shares in the Company/he/she/it shall
first offer such shares in writing to the other. If the other does not accept
in writing the offer within 15 days of receipt of the offer by his/her, the
Offer or shall then be at liberty within 90 days thereafter to sell the shares
so offered to any other persons of his/her/its choice at the same price and on
the same terms and conditions as contained in the written offer in the first
instance falling which the procedure contained in this sub-clause shall be
repeated by the Offer or.
b. The provisions of
sub-clause (a) of this clause shall not apply to a transfer of shares in the
Company by "A" to a Company which holds more than 51% of the
shareholding of A nor to a Company in which at least 51% of the shares are held
by A, nor to a transfer of shares by "B" to his relatives up to 24%
of the paid-up capital of the Company for the time being. The expression
"relatives" for the purpose of this sub-clause shall have the same
meaning as that assigned in the Companies Act, 1956.
12. The parties hereto
agree and undertake not to disclose or divulge directly or indirectly to a
third party any trade or business secrets or other secret or confidential
information pertaining to the business, affairs or transactions of each other
or of the Company or of clients or customers that may have been disclosed,
imparted to or acquired by either or them from the other or from the Company.
13. The parties hereto
jointly and severally undertake:-
a. that they shall
ensure that they, their representatives, proxies and agents representing them
at general meetings of the shareholders of the Company shall at all times
exercise their votes in such manner so as to comply with, and to fully and
effectually implement, the provisions of this Agreement.
b. That if any
resolution is proposed contrary to the terms of this Agreement the parties,
their representatives, proxies and agents representing them shall vote against
it. If for any reason such a resolution is passed, the parties will, if
necessary, join together and convene an extraordinary general meeting of the
Company in pursuance of section 169 of the Companies Act, 1956 for implementing
the terms of this Agreement.
14. The parties hereto
shall jointly and severally procure and/or ensure that the Director or
Directors of its choice on the Board of the Company shall at all times fully
and effectually implement and comply with (including by exercise of voting
rights at meetings of the Board or resolutions by circulation and on
resolutions passed at a meeting of any Companies of the Directors) the
provisions of this Agreement.
15. If either party shall
commit a breach of any of the terms or provisions of this Agreement and shall
fail to rectify such breach within 60 days from the receipt of written notice
from the party complaining of the breach then the latter shall be entitled,
without prejudice to its other rights and remedies under this Agreement or at
law, to terminate the Agreement recorded herein by written notice.
anything to the contrary herein contained this Agreement shall stand terminated
forthwith upon A and/or B''s shareholding in the Company being reduced for any
reason whatsoever below 26% of the issued, subscribed and paid-up share capital
of the Company for the time being.
17. No modification or
alteration of this Agreement or any of its terms or provisions shall be valid
or binding on the parties hereto unless made in writing duly signed by both the
parties and by or on your behalf.
18. This Agreement is
personal to the parties hereto and shall not be transferred or assigned in
whole or in part by either party without the prior written consent of the
19. If any dispute or
difference shall at any time arise between the parties to this Agreement as to
any term, provision or matter contained herein or as to their respective
rights, claims, duties or liabilities hereunder or otherwise howsoever in
relation to or arising out of or concerning this Agreement, such dispute or
difference shall be referred to the arbitration of two arbitrators, one to be
appointed by each party and in the event of the arbitrators differing, to an
umpire to be appointed by the said two arbitrators before entering upon the reference,
the venue of such arbitration shall be in Bombay unless the parties otherwise
agree in writing. Such arbitration shall be held under and in accordance with
the provisions of the Arbitration and Conciliation Act, 1996.
20. This Agreement
represents the entire agreement between the parties hereto on the subject
matter hereof and cancels and supersedes all prior agreements, arrangements or
understandings, if any, whatever oral or in writing.
WITNESS WHEREOF the parties hereto have executed these presents the day and
year first hereinabove written.
AND DELIVERED by the within named
the presence of ___________________
AND DELIVERED by the within-named
the presence of _______________________