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Business Transfer Agreement

  • Re-organizing business
  • Draft agreement
  • Availing of tax
  • Development and advancement of business
  • Strategic investment
  • Professional’s advice

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Introduction

Re-organizing the business whether financial, technological, organizational by way of merger, amalgamation, arrangement, compromise, demerger, acquisition, takeover, strategic alliance or slump sale is a complicated and a lengthy process.

Business Transfer Agreement is an agreement executed by and amongst the transferor and the transferee company to by way of executing a slump sale where every asset and the liability of one or more units transferred, sold, leased or assigned to any other for the lump sum consideration. This type of agreement provides ownership of other businesses.

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Importance of Business Transfer Agreements

  • It helps in improving the business performance post-integration.
  • It helps in improving the focus on core areas and also helps in optimizing operational synergies.
  • It helps in facilitating the strategic investments.
  • It helps in availing of tax and the regulatory advantages associated with the business.
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Elements Which Requires Deep Understanding Before Executing Business Transfer Agreement

  • Sale of any part of the undertaking
  • Payment for such transfer should be in lump sum consideration
  • Transferring the undertaking on a going concern basis
  • Transfer assets & liabilities of that undertaking which will be transferred
Process
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Process of Drafting of Dispute Settlement Agreements

1. Placing request

As when we receives from you request for drafting of a Business Transfer Agreement, our expert team will share a questionnaire to be filed by you for taking your request forward.
Direction Arrows
Step 01

2. Drafting of Agreement

After receiving the said questionnaire and the information relevant for drafting of the agreement we will begin to draft the same and if in need we require any other information the same will be sought by us through a call. The drafting of the agreement might take 2-4 business days.
Step 02

3. Sharing of Ist draft

Once the agreement is ready from our side we will share a draft of the same with you for final approval. If you find the same in order the final copy will be shared in a day and if corrections or additions are required then the same will be revised and verified by our team.
Step 03

4. Sharing of Final Agreement

Our experts will do the needful and the same will be shared with you as final agreement
Step 04
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Modes of Execution of Business Transfer Agreement

There are two modes available in which Business Transfer Agreement can be formed which are mentioned below:

  • Agreement to sell: It is only the way in which respective business undertaking is to be sold shall be laid down. The agreement executed itself does not result in  transfer of the undertaking on immediate basis, rather it is an underlying agreement whereby the intent of parties is laid down giving effect to an intended slump sale and the actual sale is carried out by diverse agreements/documents. Therefore, it only remains as an indication of the intention, effectuated by the subsequent binding documents.
  • Deed of conveyance: It is the agreement or the Deed which leads to the sale of the business undertaking and the payment of consideration received for the undertaking. In this type of document, parties agrees to transfer the said undertaking and actually effects the transfer of undertaking.
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Contents of Business Transfer Agreement

Following contents shall be mandatorily required to be covered under the Business transfer agreement:-

  • Schedule of the Assets
  • List of the contracts
  • Details of the total intellectual property
  • Pending suits and cases under authority, if any
  • Schedule of the Liabilities
  • List of the employees
  • Name of the parties
  • Closing date
  • Detail of the creditors
  • Lump-sum consideration involved
  • Address of the parties
  • any other clauses may be deemed fit.
Faq's
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FAQ's On Business Transfer Agreement

What do you mean by Transferor and Transferee?
Transferor is the person/party who is making a transfer of business or his/her property to another party as part of a legal arrangement and that another party is transferee.
Does Agreement to sale means transfer of undertaking?
No, Agreement to sell doesn’t mean the transfer of undertaking, it is merely an instrument where the intention of parties is laid down and parties mutually decide to reach a certain decision of purchase or sale of undertaking.
On what points the Business transfer agreement should provide clarity?
There are three points on which Business Transfer Agreement should focus i.e. what and which assets are being transferred; what is the consideration involved; and how the same will be paid.
What do you mean by slump sale?
Transfer of one or more undertakings as a result of the sale for a lump sum consideration without values being assigned to the individual assets and liabilities in such sales.
Business Transfer Agreement becomes legally binding when it is printed on judicial stamp paper or an e-stamp paper which is to be signed by both the Transferor(Vendor) and the Transferee(Purchaser), and has been dated. The value of the stamp paper depends state to state in which it will be executed. Each state in India has different provisions in respect of the amount of stamp duty to be paid.
What do you mean by slump sale?
Transfer of one or more undertakings as a result of the sale for a lump sum consideration without values being assigned to the individual assets and liabilities in such sales.

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