Overview of Share Holding Agreement

What is Share Holder Agreement

A shareholders agreement is a written agreement between the shareholders or partners of a business; it is ground rules of the relationship between the shareholders.

Indian Law and Share Holder Agreement

Shareholders’ agreements are not mandatory under Indian law. Shareholders’ agreements are binding only on the parties to the shareholders’ agreement and as it is a contractual arrangement between the parties

Benefits of a Shareholders' Agreement

It is a commonly use mechanism to regulate avoiding any disputes over the running of a business and its funding.

Main provisions, Clauses and Outline of Share Holding Agreement

 Parties to Agreement

The parties to a holders' Agreement are the shareholders of the corporation. Ideally, all holders will participate in the holders' Agreement.

Definitions and Interpretation Clause

To avoid any misinterpretation or minimize the dispute over a particular point, it is better to have definitions and interpretation clauses, which provide a straight and clear meaning, and in what manner it shall be interrelated of any word or phrases used in the agreement.

Structure of the senior executive team 

This clause defines the board of director, the size of the board, right and liability, restrictions on board, meeting of the board etc. 

Restrictions against Transfer

A provision that prohibits one of the shareholders from selling, transferring, or encumbering shares without the prior written consent of the other shareholders.

Right of First Refusal

This is an agreement between the existing shareholders whereby the shareholder wishing to sell to a third party must first offer the shares to the holder of the first refusal right. Rights of first refusal protect the Company and non-selling shareholders from sales of stock to unfriendly parties or competitors.

Buyout Rights

These give the company the right to redeem the shares of a certain shareholder in specific circumstances, such as withdrawal or death of the shareholder.

Purchase Price

A Shareholders Agreement will generally include some formula for valuing shares purchased. These formulas vary from fair market value determined by one or more appraisers, to book value, or no value, depending on the situation.

Valuation of Shares

The valuation of the Shares of the Company required to be determined under applicable Law in accordance with the method prescribed under the relevant regulations and notifications issued under.

Co-Sale Rights

These provisions can require that the price offered by the third party must exceed a certain threshold before the shareholders have the obligation to sell.

ESCROW ARRANGEMENT

To secure due performance of their obligations, with an escrow agent to be mutually agreed between the Promoter and Investors

NON-COMPETE UNDERTAKING

The Promoters agree shall not, without the prior approval of the Board and prior written approval of the Investors, directly or indirectly, including through an Affiliate or nominee, engage in or be involved in any business or commercial activity other than the Business of the Company. 

INDEMNITIES

The Company and the Promoter agree to jointly and severally indemnify, defend and hold harmless the Investors, respective Affiliates of the Investors, and their respective directors, officers, representatives, employees, managers and members  from and against any and all Losses.

DISPUTE RESOLUTION

The Parties agree to negotiate in good faith to resolve any dispute between them relating to the Transaction Documents.

CONFIDENTIALITY AND NON-DISCLOSURE

In companies where shareholders have different business interests, some being more active than others in the company, it is essential to include confidentiality clauses so as to protect the company from the release of commercial information to competitors or other outsiders.

Other General Provisions

NOTICES

Notice to other party how and in what manner it would serve, where and to whom it would serve, in case of dispute arises.

Entire Agreement

To prevent the parties to a contract being liable for statements or representations, made in the context of contractual negotiations, which are not incorporated into the agreement.The purpose of such clauses is clear - as a matter of commercial certainty, it is desirable that the entire agreement between the parties be contained in one easily accessible document.

Governing Law and Jurisdiction

In case of any dispute what laws are applicable and what would be the jurisdiction.

Effective Date

No Objection

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CRIMINAL TRIAL IN INDIA

Right move at the right time is the pivot of success in criminal proceedings, but for making a right move it is necessary to understand the criminal justice system (CJS).

TYPE OF CRIMINAL TRIAL

Under the Cr.PC, criminal trials have been categorized into three divisions having different procedures, called warrant, summons and summary trials.

1. Warrant Cases (WC): A warrant case relates to offenses punishable with death, imprisonment for life or imprisonment for a term exceeding two years. 

o       Two types of procedure follow in WC by Magistrate –

§        Instituted on Police Report (Upon Charge Sheet)

§        Instituted on Private Complaint ( Examination of Prosecution).

2. Summon Cases (SC): Relating to the offenses punishable with imprisonment not exceeding two years. In respect of summons cases, there is no need to frame a charge. The court gives the substance of the accusation, which is called “notice”, to the accused when the person appears in pursuance to the summons.

3. Summary Trial: Relating to the offenses punishable with a fine or imprisonment for a term not exceeding six months. In a summary trial, no sentence of imprisonment for a term exceeding three months can be passed in any conviction. 

Information of offense to

§        Police

§        Magistrate

Information to Police for Cognizable Offences ( cognizable office means where police can arrest the person without warrant) police are bound to registered the FIR u/s 154 Cr.P.C 

In case of non cognizable offices ( u/s 155 Cr.P.C) / incidences police registers the information but advice the complaint to approach the court / other legal mechanism for remedy.

Section 154 of Cr.P.C, binding on police to 

• Every information relating to the commission of Cognizable office , if given orally to an officer in charge of a Police Station shall:-

Ø     Reduced to writing.

Ø     Read over to the informant

Ø     The substance thereof shall be entered in a DD ( daily diary)

Ø     Provide a free copy of said record information to the informant 

What to do if Officer In charge of the Police Station Refused to Record the Information?

Any person, aggrieved by a refusal on the part of an Officer in charge of a Police Station to record the information u/s 154 of Cr. P.C, may send the substance of such information, in writing and by post to the Superintendent of Police Concerned, and also approaches to Magistrate u/s 156 (3) for directing the Police to lodge an FIR.

Complaint to Magistrate u/s 200 Cr.PC  

Upon receiving the complaint the Magistrate Examine the Prosecution ( Pre Summoning Evidence), and if found any offense is made out, order for investigation and further investigation into Police, after investigation Police file the Status Report before the Magistrate.

Investigation by Police

After the registration of FIR, police investigates the case, investigation includes, collecting the evidence, examination of various persons / accused and recording of  statement of the witness / accused, search and seizure, and, and discovery and arrest of the suspected offender it ends with the formation of the opinion as to whether on the material collected, there is a case to place the accused before a Magistrate for trial and if so, taking the necessary steps for the same by filing of a charge sheet under section 173 of Cr.P.C.     

Disclose Statement of Accused
The Statement (answers and explanations) given by the accused is entirely for the benefit of accused and the accused only. The statement cannot be used by the Court against him or her nor is the prosecution permitted to use to fill up any gap or lacuna left in the prosecution evidence.  (The Indian Evidence Act)

Bail

Following authorities are authorized to grant bail under Cr.P.C

• Police ( In case of bailable offenses)
• Court ( In bailable and Non bailable offense)

Charge Sheet  

The primary object of framing a charge is to give notice of the essential facts which the prosecution proposes to establish to bring home charge to the accused so that he will be able to defend and may not be prejudiced. 

The charge sheet is the brief summary of how an offense had been committed? What was the role of each person who was involved in the crime and the sections under which the investigating officer had charged all the accused. The charge sheet also contains the names of the person who were investigated but could not be charged due to what of evidence. Filing of the charge sheet generally means that the investigation in the case is over and now the court has to consider the evidence collected by the investigating agency. It is to be noted, that if during the course of the trial, some new facts come to the light, the agency may file additional / supplementary charge sheets.

At the stage of framing a charge, the court has to be satisfied only prima facie about the existence of sufficient grounds for proceeding against the accused. The court is not required to appreciate evidence to conclude whether the materials produced are sufficient for bringing home guilt of the accused

Column no 11 for Particulars of accused persons charge-sheeted.

Column no  12 for Particulars of accused persons – Not charge sheeted

Cognizance of Offense by Magistrate 

Taking cognizance does not involve any formal action or indeed action of any kind but occurs as soon as a Magistrate as such applies his mind to the suspected commission of an offense. Cognizance, therefore, takes place at a point when a magistrate first takes judicial notice of an offense. This is the position whether the magistrate takes cognizance of an offense on a complaint, or to a police report, or upon information of a person other than a police officer.

Framing of Charge / Argument on Charge

This is the beginning of a trial the court looks into the evidence collected by the investigating agency and applies its mind so as to what are the charges under which an accused has to be booked. For example, the police has filed a charge sheet accusing a person of murder under section 324, but the court deems it proper to charge the person for section 323.

Pleads guilty

At this stage, if an accused pleads guilty then the court will apply its judicial mind and decide the punishment accordingly. And if the accused pleads not guilty, he is informed the charges under which he would be required to face the trial.

Discharge of Accused

On the other hand, if the court finds that no offense against an accused is made out; the accused is discharged from the case.

Recording of the Prosecution Evidence

After the charge is framed, the prosecution has been asked to examine its witnesses before the court. 

Examination-in-chiefThe statement of witnesses is on oath. This is called examination-in-chief (The process of recording the statement of PWs.) 

Cross Examination

Interrogation of a witness called by one's opponent. 

Exhibit- The evidence which is brought before the court and which the court considers are called “Exhibit”. 

Statement of accused

The court has powers to examine the accused at any stage of inquiry or trial for the purpose of eliciting any explanation against incriminating circumstances appearing before it. However, it is mandatory for the court to question the accused after examining the evidence of the prosecution if it incriminates the accused. This examination is without oath and before the accused enters a defense. The purpose of this examination is to give the accused a reasonable opportunity to explain incriminating facts and circumstances in the case. 

Evidence of Defense

Accused also asked to lead his evidence. The accused person is also a competent witness under the law. The accused may apply for the issue of process for compelling attendance of any witness or the production of any document or thing. The witnesses produced by him are cross-examined by the prosecution.

The accused person is entitled to present evidence in case he so desires after recording of his statement. The witnesses produced by him are cross-examined by the prosecution.

Final Argument
Both the side argue to establish their case.

Judgment
After conclusion of arguments by the prosecutor and defense, the judge pronounces his judgment in the trial.

Arguments on sentence

Once a person is convicted of an offence, both the sides present their arguments on what punishment should be awarded to an accused. 

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