Service ID: V05-SVC-001 Direct Regulatory Service Indian Contract Act, 1872

Founder Pacts, Shareholder Agreements (SHA) & Share Purchase Agreements (SPA)

Drafting robust, enforceable contractual architectures defining equity vesting schedules, board representation, affirmative voting rights, liquidation preferences, drag-along/tag-along covenants, and non-compete protections between founders and institutional venture investors.

Statutory Authority

Indian Contract Act, 1872 & Specific Relief Act, 1963 read with Companies Act, 2013

Governing Jurisdiction

Republic of India (Central Portal)

Execution SLA

3 to 5 Business Days

Why This Statutory Filing Is Required

Drafting robust, enforceable contractual architectures defining equity vesting schedules, board representation, affirmative voting rights, liquidation preferences, drag-along/tag-along covenants, and non-compete protections between founders and institutional venture investors.

Statutory Mandate: Indian Contract Act, 1872 & Specific Relief Act, 1963 read with Companies Act, 2013

Who This Service Is For & Statutory Eligibility

Startup co-founders incorporating a joint enterprise, companies raising seed, Pre-Series A, or growth equity rounds, and strategic investors acquiring minority or controlling equity stakes in Indian corporate entities.

Prerequisites & Mandatory Documents Checklist

  • Cap table breakdown (pre-money and post-money equity holdings and option pools)
  • Term Sheet or Letter of Intent (LOI) signed with lead institutional or angel investors
  • Charter documents of the company (Memorandum and Articles of Association)
  • Vesting schedule parameters (reverse vesting, cliff periods, good leaver vs bad leaver terms)
  • Reserved matters catalogue (affirmative vote items requiring investor or founder consent)
  • Valuation report and subscription price particulars under Section 42 / 62(1)(c)

Step-by-Step Portal Execution Procedure

  1. Step 1: Conduct in-depth commercial discovery on cap table, board seats, and dilution triggers
  2. Step 2: Draft comprehensive Founder Agreement or SHA incorporating standard NVCA/IVCA terms
  3. Step 3: Structure critical investor covenants: Information Rights, ROFR, Tag-Along, Drag-Along, and Exit timelines
  4. Step 4: Coordinate multi-party negotiations and reconcile redlines between founders and investor counsels
  5. Step 5: Finalize execution copy, arrange e-stamping (state stamp duty), and coordinate digital signatures
  6. Step 6: Amend Articles of Association (AoA) via Form MGT-14 within 30 days to entrench agreement terms

Transparent Pricing & Statutory Cost Architecture

Government Fees & Disbursements

Government Statutory Fee: State non-judicial stamp duty on agreements (typically ₹100 to ₹1,000 depending on state); plus MCA ROC filing fee for linked AoA amendment (Form MGT-14: ₹200 to ₹600).

Statutory Penalties for Non-Compliance

Operating without an executed SHA risks protracted deadlock in board voting, co-founder abandonment with unvested equity, and vulnerability to hostile minority litigation under Sections 241-242 of Companies Act. Un-entrenched SHA terms are unenforceable against the company under Supreme Court precedents (VB Rangaraj doctrine).

Dedicated operational desk: Alappuzha, Kerala • Pan-India MCA V3 / Income Tax / GST e-Filing Infrastructure.

Frequently Asked Questions

Why must SHA terms be incorporated into the company's Articles of Association (AoA)?
Under Indian corporate law precedents, any agreement between shareholders is enforceable against the company only if its terms are formally incorporated into the Articles of Association.
What is the difference between good leaver and bad leaver provisions?
Good leavers (voluntary resignation without fraud, death, or disability) retain vested equity. Bad leavers (breach of contract, fraud, or gross misconduct) typically forfeit unvested equity and may face forced buyback of vested shares at nominal face value.