Share Purchase Agreement Indemnity Clause

Given the nature of the compensation clause and the fact that the benefits to the compensated party are substantial, the use of the clause is limited to specific cases defined in the share purchase agreement, i.e. the impact of which results from the reported events and refers to the taxes covered in the contract, the maximum liability of the purchaser being strictly limited to a certain amount (if the parties have agreed to such an amount) with respect to an event and/or any declared event. Both the compensation clause and the seller`s guarantees are time-limited and should not last longer than the expiry of the company`s tax commitments. i) The seller may exempt the buyer from historical claims and any consequences of such claims against the company. However, due to the broad nature of this protection, the purchaser, as an compensated interested party, is generally required to assert the right “appropriately and closely to the business.” A key document in transactional practice is the share purchase agreement (or SPA). This document contains provisions that govern, among other things, the terms of the transaction, the payment of the price and the financial accounts between the parties, their obligations and responsibilities. This is the main document negotiated between the parties to cover tax issues. In recent years, particularly for transactions with certain countries, PSPs will be accompanied by taxes. A tax deed is a separate document dealing with the tax issues agreed between the buyer and the seller. In addition to the caps, an individual de minimis amount is regulated by the BSB, so that the seller is not liable for claims, unless the amount of liability exceeds a certain amount, which can be determined either as a specified amount or as a percentage of the purchase price (usually 0.1% to 1.5%). The compensated party may be designated as a seller or, in the case of more than one seller, in all or in one of the sellers. It can be established that all sellers can be held jointly liable or held liable for their participation in the sub-subject company.

The compensated party may be the buyer and/or the bid company. In addition, it is advisable that the clause specifically provide for the coverage of costs and fees, including reasonable legal fees for the buyer and the target company. Certainly, the Indian courts have argued that a damages holder has the right to claim compensation for simple delimitation of liability, that is, before actual injury or loss, and that compensation is not necessarily claimed after payment. However, the discharge may be the subject of a contractual agreement between the parties.