India's #1 Compliance Partner

Asset Purchase Agreement

An Asset Purchase Agreement (APA) is the legally binding contract that records the sale and transfer of specific business assets...

Free Consultation

25,000+

Clients

200+

Certifications

25+

Years

Pan-India

Presence

Get expert consultation

Trusted by 25,000+ leading enterprises worldwide

Key takeaways

An Asset Purchase Agreement (APA) records the sale of identified assets and liabilities of a business, rather than the shares of the company that owns them.
It is governed primarily by the Indian Contract Act, 1872, with transfers of immovable property attracting the Transfer of Property Act, 1882 and the Registration Act, 1908.
The buyer can cherry-pick the assets it wants and leave unwanted liabilities behind, which makes an APA attractive in distressed and carve-out deals.
Stamp duty is payable under the relevant State Stamp Act and varies by state and by the nature of the assets transferred.
Companies must usually obtain board and, for substantial sales, shareholder approval under the Companies Act, 2013.
A well-drafted APA turns on its representations, warranties, indemnities and conditions precedent - the clauses that allocate risk between the parties.

Overview

What is an Asset Purchase Agreement?

An Asset Purchase Agreement is a definitive contract under which a seller transfers selected business assets - and, where agreed, specific liabilities - to a buyer for an agreed consideration. Unlike a share purchase, where the buyer acquires the company itself along with everything inside it, an APA lets the buyer acquire only the parts of a business it actually wants.

Because the buyer steps into ownership of individual assets rather than the legal entity, an APA must describe precisely what is being sold, how title will pass for each class of asset, and which obligations the buyer is and is not assuming. That precision is what protects both sides if a dispute arises later.

Assets commonly transferred under an APA

Plant, machinery and equipment
Stock-in-trade, inventory and raw materials
Land, buildings and leasehold interests
Intellectual property - trademarks, patents and copyrights
Customer contracts, supplier agreements and goodwill
Licences, permits and approvals (where transferable)

Asset deal vs share deal

When you need an Asset Purchase Agreement

An APA is the right instrument when the commercial intent is to buy a business or a business unit on a selective basis, rather than acquiring an entire company. The table below shows how an asset deal compares with a share deal.

Asset purchase	What it means
Selective acquisition	Buyer chooses specific assets and assumes only agreed liabilities.
Liability protection	Unknown and historical liabilities can be left with the seller.
Title transfer	Each asset is conveyed separately, sometimes needing registration.

Share purchase	What it means
Whole-entity acquisition	Buyer takes the company with all assets and liabilities.
Continuity	Contracts and licences usually continue without re-assignment.
Inherited risk	Buyer inherits past liabilities, including unknown claims.

Typical situations where an APA is used

Acquisition of a single division or product line (a carve-out)
Purchase of a distressed business or assets in insolvency
Sale of a business as a going concern (slump sale)
Buying a manufacturing unit, brand or customer book
Restructuring or hive-off of a business segment
Foreign investors acquiring Indian business assets

Anatomy

Key clauses in an APA

The strength of an Asset Purchase Agreement lies in its clauses. Each one allocates a slice of commercial and legal risk between buyer and seller.

Identified assets

A precise schedule of the assets being sold and any expressly excluded assets.

Consideration

The purchase price, how it is apportioned across assets, and the payment mechanism.

Representations & warranties

Assurances on title, condition, litigation, tax and compliance, given by the seller.

Indemnities

Protection that puts the buyer back in funds if a warranty proves untrue.

Conditions precedent

Approvals and steps that must be completed before completion can occur.

Non-compete & confidentiality

Restrictions stopping the seller from undermining the value being bought.

Legal framework

The law that governs an APA

An Asset Purchase Agreement is a commercial contract, so its foundation is the Indian Contract Act, 1872. Beyond that, several statutes apply depending on what is being transferred and who the parties are.

Indian Contract Act, 1872: validity, consideration and enforceability of the agreement.
Transfer of Property Act, 1882: transfer of immovable property forming part of the deal.
Registration Act, 1908: registration of conveyances of immovable property.
Companies Act, 2013: board and shareholder approvals, including Section 180 for sale of an undertaking.
State Stamp Acts: stamp duty on the agreement and on instruments of transfer.
Income Tax Act, 1961: capital gains and slump sale treatment under Section 50B.

How it works

The drafting and execution process

We take an Asset Purchase Agreement from first instructions through to signed, stamped and enforceable. The journey usually runs along two parallel tracks.

Drafting the agreement

Understand the deal
We map the commercial intent, the assets in scope, the price and the risk appetite of each side.
Draft the APA
We prepare the agreement with tailored schedules, warranties, indemnities and conditions precedent.
Negotiate
We mark up the counterparty’s comments and negotiate the allocation of risk on your behalf.
Finalise
The agreed draft is locked, stamped per the applicable State Stamp Act and made ready for signing.

Completing the deal

Due diligence
Title to assets, encumbrances, contracts and approvals are verified before completion.
Approvals
Board and, where required, shareholder resolutions and third-party consents are obtained.
Execution
The parties sign, conditions precedent are satisfied and consideration is paid.
Closing & transfer
Title passes, conveyances are registered where needed and possession is handed over.

Paperwork

Documents required

Constitutional documents of both parties (incorporation certificate, MOA/AOA or partnership deed)
Board and shareholder resolutions authorising the transaction
Schedule and valuation of the assets being transferred
Title documents for immovable property and registered intellectual property
Existing contracts, leases and licences to be assigned
Details of liabilities, charges and encumbrances on the assets
Identity and authority documents of the signatories
Due-diligence reports and any required regulatory approvals

Stamp duty & timeline

Cost & duration

Stamp duty is governed by the State Stamp Act where the assets or parties are located, and differs by state.
Transfers of immovable property attract higher, ad valorem stamp duty and registration charges.
Professional fees depend on the deal value, the number of assets and the negotiation involved.
A straightforward APA can be drafted within days; complex deals run over several weeks with diligence and approvals.

Drafting or reviewing other contracts? See our Non-Disclosure Agreement, Memorandum of Understanding and Trademark Registration services.

Why it matters

Benefits of a well-drafted APA

Clean acquisition

Buy only the assets you want and leave unwanted obligations with the seller.

Risk allocation

Warranties and indemnities clearly fix who bears which liability.

Enforceability

A precise, properly stamped agreement stands up if a dispute arises.

Tax efficiency

The structure can be aligned to slump-sale and capital-gains treatment.

Protected value

Non-compete and confidentiality clauses safeguard goodwill and know-how.

Certainty at closing

Conditions precedent ensure every approval and consent is in place before completion.

Why Diligence Certifications

Your partner for deal documentation

Asset deals are won and lost in the detail of the contract. Our team drafts, reviews and negotiates Asset Purchase Agreements that reflect the commercial reality of your transaction while keeping you protected under Indian law.

Bespoke drafting tailored to your assets, sector and risk appetite
Clear, plain-English clauses that still hold up in court
Coordinated diligence, stamping and registration support
Experienced negotiation to protect your commercial position

Planning an asset purchase or sale?

Tell us about the business and the assets in play, and we will draft an Asset Purchase Agreement that fits the deal and protects your interests.

Talk to a legal expert

FAQ

Frequently asked questions

What is an Asset Purchase Agreement?

An Asset Purchase Agreement is a contract under which a buyer acquires specific assets and agreed liabilities of a business from a seller, rather than buying the shares of the company that owns them. It sets out the assets, the price, and how risk is shared between the parties.

How is an asset purchase different from a share purchase?

In an asset purchase the buyer selects specific assets and assumes only agreed liabilities, leaving the rest with the seller. In a share purchase the buyer acquires the whole company, including all of its assets, contracts and historical liabilities.

Which laws govern an APA in India?

The Indian Contract Act, 1872 governs the agreement itself. Transfers of immovable property engage the Transfer of Property Act, 1882 and the Registration Act, 1908, while corporate approvals are dealt with under the Companies Act, 2013 and tax under the Income Tax Act, 1961.

Is stamp duty payable on an Asset Purchase Agreement?

Yes. Stamp duty is payable under the relevant State Stamp Act and varies from state to state. Transfers of immovable property attract higher, value-based stamp duty along with registration charges.

Do company assets need board or shareholder approval to sell?

Usually yes. A board resolution authorises the transaction, and where a company sells the whole or substantially the whole of an undertaking, shareholder approval under Section 180 of the Companies Act, 2013 is generally required.

What are warranties and indemnities in an APA?

Warranties are assurances the seller gives about the assets - for example on title, condition, litigation and tax. Indemnities are promises to compensate the buyer if a warranty turns out to be untrue, and together they allocate risk between the parties.

25,000+

Clients served

200+

Certifications

100+

Experts

25+

Years

Why Diligence

Why choose Diligence Certification?

For compliance and credibility, Diligence is much more than a checklist - we give you real confidence in your business. We examine your legal, financial and operational status, so you are not just certified, but trusted.

Stronger risk protection

Spot hidden legal, financial or operational risks early - fix problems before they become threats.

Earn stakeholder trust

From investors to customers, people want to work with businesses that play by the rules.

Stay legally aligned

Compliant not just on products but on labour, environmental and tax laws too.

Enhance brand reputation

Show the world you operate with integrity and transparency.

Stand out from competitors

In a crowded market, credibility is your biggest edge.

24×7 expert support

A 100+ strong service team guiding you at every step, free first consultation.

Real sites, real certifications

Our teams work inside factories and plants across India and abroad - inspections, audits and certification milestones spanning BIS, global schemes and the full compliance stack you see on this site.