AGREEMENT BETWEEN TWO PERSONS FOR FORMATION OF A NEW COMPANY   

Date: -

___________________________________

And

 

 

WHEREAS the parties hereto have agreed to form a company for the purpose of carrying on business as _____________________

NOW IT IS HEREBY AGREED as follows:

 

1. Mr A shall forthwith procure the incorporation of a company (hereinafter called the company) limited by shares under the Companies Act, 1956 and having an authorised share capital of Rs. ________ divided into ____________ [ordinary] shares of ___________ each. The company shall be called _____________ Limited. if such name is available for registration or by such other available name as may be agreed between the parties hereto (or in default of such agreement as (one of the parties) shall select).

 

2. The memorandum and articles of association of the company shall be in the form of the proof attached hereto and marked
3. with such modifications as the parties hereto may agree in writing.

 

3. The memorandum and articles of association shall be subscribed by the parties hereto or their respective nominees each of whom shall agree in the memorandum to take up one (ordinary) share of _____________ in the capital of the company.

 

4. Each of the parties hereto will exercise his voting rights for the time being in the company against any resolution for the removal of any other party hereto from his office of director of the company prior to the ________ day of ___________ or at any time thereafter while such other party holds (or such other party (and) his close relatives (and any trustee or trustees of a family settlement made by him) hold between them (ordinary) shares or stock in the capital of the company having an aggregate nominal value of not less than Rs. _________ (or not less than ___________ per cent in nominal value of the issued (ordinary) share capital of the company).

 

5. For the purpose of this clause a person shall be deemed to be a close relative of one of the parties hereto only if he or she is the spouse (parent brother or sister (whether of the whole or half blood) or the child adopted child step-child or grandchild of the party in question (or of any such brother or sister) (And a person shall be deemed to be a trustee of a family settlement made by one of the parties hereto only if such person is the sole trustee or one of the trustees of a trust under which no person other than the party in question his spouse parent (and) issue (including issue not yet born) (brother or sister) (whether of the whole or half blood) and the issue (including as aforesaid) of any such brother or sister) is entitled to any beneficial interest).

 

6. So long as any of the parties hereto is entitled to be a director of the company each of the parties hereto will exercise his voting rights for the time being in the company and take such other steps as lie within his power to procure that the maximum number of directors of the company shall not exceed ___________

 

7. Each of the parties hereto will within ____________ days of incorporation of the company make an unconditional application in writing to the company for the allotment to him for cash at par of __________ [ordinary] shares of _______ each in the capital of the company upon terms that such shares shall be payable in full [or as to __________ [ _____ per share] upon allotment and neither party hereto will withdraw any application so made.

 

8. Each of the parties hereto will take such steps as lie within his power to procure that the company makes simultaneous allotments of the shares so applied for.

 

9. Each of the parties hereto will on the _______ day of ___________ or on such later date as they may agree in writing advance to the company the sum of Rs.__________ upon terms that the company will issue to the maker of each advance within _______ days of the making thereof a debenture in the form of the draft annexed hereto and marked [B] with any such modifications as they may agree in writing.

 

1. Each advance will be free of interest [or The amount of each advance for the time being outstanding will bear interest at the rate of ______ per cent per annum [or _______ per cent above bank rate for the time being with a minimum rate of ______ per cent per annum] such interest to be calculated on a day to day basis and to be payable by [half] yearly instalments on the _______ day of ______ [and the ________ day of _________] in each year [add if desired, PROVIDED that no interest will accrue in respect of any period prior to the ______ day of _______];

 

1. Each advance will be repaid on the ____________ day of ___________ or upon the earlier happening of any of the following events:

 

1. the service on the company of a notice signed by both parties hereto requesting immediate repayment;

 

1. the passing of a resolution or the making of an order for the winding up of the company;

 

                                                                iii.      the appointment of a receiver of all or any of the assets of the company;

 

1. the company being in arrear for more than ______ months in the payment of interest due on any                                                advance made to it pursuant to this agreement;

 

1. The company will be entitled to repay the whole or any part of such advances at any time provided that (unless the parties hereto otherwise agree in writing) every repayment shall be divided between the parties hereto rateably according to the respective amounts of their advances hereunder for the time being outstanding;
2. The advances will be unsecured and so long as any part of them is outstanding the company will not save with the written consent of                           the parties hereto create or agree to create or suffer to exist any mortgage charge or other encumbrance over any of its assets].

 

10. Each of the parties hereto will take such steps as lie within his power to procure that the company reimburses Mr A in respect of all reasonable costs and expenses incurred by him in connection with the formation of the company [and that the company reimburses Mr A and Mr B in respect of all reasonable costs and expenses incurred by them respectively in connection with the preparation of this agreement].

 

AS WITNESS etc.

_______________________________

 

_______________________________

 

[Signatures of or on behalf of both parties]