Question

At some point your entrepreneurship spirit will flag. You will either want to move on to the next project, retire, or pass away.   

Discuss, using external sources to back up your assertions, what legal issues are important to consider when a sale occurs.   How may pre-planning help to smooth the transition (look up buy/sell agreements to get started on that subject)? What about non-competition agreements, asset v. stock purchases, and the like?    Be creative here.

Answer 1

A sale transactions involves many obligations. When a sale hapens its not just the asset or property you are transfering you also transfer the rights of the property, liabilities, obligations, legal assertion, ownership, etc. Legal issues, financial issues, Statutory obligations, etc. are to be cleared. When a sale occurs, the owner of the asset / property requires to obtain proper approval, No objection certificate from Bank (if it was mortgaged), Society (in case of cooperative society), Builder (if required) and from other owner in case of joint ownership. Clearance of any dues ie Statutory dues (municipal taxes, property tax, water bill, etc.) Society dues (maintainence charges, transfer fees, etc), dues clearance with utility service provider ie electricity, gas,etc. All this clearnace are required from legal stand point for smooth transfer of asset or when sale occurs.

Pre-plaaning will enable a smooth transition. Planning in advance all the required formalities will help avoiding last minute hassles and delay. This preplanning could be checking any outstanding dues with statutory authorities, keeping accounts cleared, checking the documentation with respect to government letters, No objection certificates. Checking with local registrar for transfer fees, property value, stamp duty and property tax applicable.

In case of leaving a job to pursue entreprenuership the company might ask to sign a non compete agreement. This agreement refrains the other party to not to start a similar profession or join the competitors in the similar business. This is a restrictive agreement involved with a period stamp. These needs to be properly devised and preplanned so that our entry into a venture which is restrictive is not attracted. Violation to this agreement will involve legal proceedings.

There can be cases of buying assets of the company or buying stocks or share of the company. instead of being an employee buying stocks will make you the owner.