An asset sale can be undertaken through a business transfer agreement (BTA). In the case of an asset sale, the BTA should be provide an outline of the type of sale, terms of the sale, details of assets and liabilities and consideration payable for each asset and liability.
BTSs may be structured in two ways. First as an Agreement to
sell, wherein the manner of sale of the business undertaking is laid down.
The second where the BTA itself cause the sale of business undertaking
and payment of consideration and in such cases BTA is nothing but a Deed of
Conveyance itself.
To reduce the stamp duty implications (as a Deed of
Conveyance has much higher stamp duty implications than an agreement to sell),
it is advisable to transfer an undertaking through an asset sale by an
agreement to sell.
A Slump sale
is typically affected through a business transfer agreement (BTA). A BTA is an
agreement between a transferor and a transferee company to execute a slump sale
wherein ownership of every asset and liability of one or more units transfers,
sells, leases or assigns to another for a lump sum consideration.
A BTA
must mandatorily disclose the following in its clauses among other relevant
clauses as deemed fit.
1) Schedule
of Assets.
2) Schedule
of Liabilities.
3) Detail
of creditors.
4) List
of contracts.
5) List
of employees.
6) Lump-sum
consideration.
7) Detail
of intellectual property.
8) Name
of parties.
9) Address
of parties.
10)Pending
suits.
11)Requisite representations and
warranties.
12)Closing date.
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