Preliminary Agreement To Form A Company To Purchase And Develop Property Legal Draft Template

AGREEMENT is made

between Mr. A, residing at... of the First Part, Mr. B. residing at... of the

Second Part and Mr. C residing at... of the Third Part, as follows:WHEREAS -1.

The

parties hereto propose to carry on business of buying and developing properties

through the medium of a company limited by shares.2.

The

parties have negotiated with the owner of an immoveable property situate at...

for the purchase thereof and the terms and conditions are also settled but no

formal agreement for purchase is entered into.3.

Before

the said agreement is entered into it is necessary to enter into a formal

promotion agreement between the parties hereto and which the parties hereby

intend to do.NOW IT IS AGREED BY

AND BETWEEN THE PARTIES HERETO AS FOLLOWS:1.

The

parties hereto agree to form and register a private company limited by shares

with the main object of buying or otherwise acquiring immoveable properties,

and selling them either as such or after developing them by construction of new

buildings and selling or leasing flats and other premises therein on ownership

basis or otherwise.2.

The

name of the Company will be... or such other name as the parties will agree to

and will be approved by the Registrar of Companies.3.

The

initial nominal or authorised capital of the Company will be Rs.... divided

into... equity shares of Rs. 1000/- each.4.

The

parties will get the Memorandum and Articles of Association prepared by M/s...

Solicitors/Chartered Accountants and all other papers required to register the

Company under the said Act.5.

The

Articles of Association will provide that the Parties hereto shall be permanent

directors of the Company, without liability to retire and the number of

directors will not be less than three and more than five. The remaining two

directors will be appointed by the Parties hereto after registration of the

Company if thought advisable and in the interest of the Company. The Articles

will also provide for right of preemption to the Parties hereto or any of them

if any of them or any other share holder desires to sell his shares at the

valuation the basis of which will be provided in the Articles. Articles will

also provide that none of the parties hereto will take any action for removal

of any of the other of them as director. Articles will also make such other

special provisions as may be agreed upon between the parties and with the

advice of the legal adviser.6.

Alter

the execution of this agreement the parties hereto shall enter into an

agreement for purchase of the said property situate at... with the owner

thereof for the price of Rs.... agreed upon and containing all usual terms and

conditions and such other terms as the legal adviser will think fit and will be

agreed to by the Parties to such agreement. The earnest money required to be

paid to the owner of the said property will be paid by the parties hereto in

equal shares. The agreement will reserve the right of the parties hereto as

purchasers to transfer the benefit of the said agreement to the nominees of the

parties hereto including the proposed Company and to obtain the deed of

conveyance in the name of the said Company.7.

On

the execution of the agreement to purchase the said property, the Parties shall

get the proposed company registered under the Companies Act, 1956. The

Memorandum and Articles of Association will be subscribed by the Parties hereto

only and each of them will agree to take shares of the face value of Rs.... in

cash to enable the company to purchase the said property.8.

The

further amount of capital required for developing the said property will be

contributed by the parties hereto in equal shares in the form of debentures to

be issued by the Company and the parties may also issue shares and/or

debentures to a few friends of the parties hereto who may be interested in

buying the same.9.

On

the registration of the Company the parties hereto shall get the agreement for

purchase to be entered into by them with the owner of the said property adopted

by the Board of Directors and if the completion of the purchase is expected to

take some time after registration, the Parties hereto shall enter into an

agreement with the Company for assigning the benefit of the said agreement for

purchase by way of sub sale for the same price and on the same terms and

conditions and such agreement will also be got approved by the Board of

Directors.10. If by the time the

Company is registered, the purchase of the said property is ready for

completion, the parties hereto shall procure the deed of conveyance from the

owner of the said property and any other persons found interested therein in

favour of the Company direct and the parties hereto shall execute the same as

confirming parties.11. All the expenses of

and incidental to the said agreement and the conveyance including stamp duty

and registration charges will be paid out of the funds of the Company.12. The parties agree

that none of them will carry on directly or indirectly the said business of

dealing in immoveable properties except through the said Company.IN WITNESS WHEREOF

the parties have put their hands the day and year first hereinabove written.Signed

and delivered by the)withinnamed

Vendor Mr. B in)the

presence of...)Signed

and delivered by the)withinnamed

Promoters X, Y &)Z in

the presence of)