Redemption Agreement

Redemption Agreements are agreements between the owners and the company, where the company itself is obligated to redeem the ownership interest of the departing owner.Redemption Agreements generally address who can purchase or redeem the departing owner’s interest and the price-or method to determine the price-of such interest. Additionally, these contracts also outline the events that would trigger the redemption, sale, or transfer of ownership interest agreement. Accordingly, these agreements are advantageous in closely held businesses because they allow the owners to create a succession plan for departing owners, and to maintain continuity of the business before any issues can arise. Redemption agreement is a contract between a corporation and the stockholder, where the corporation repurchases the stock from the owner; one of the most common buy/sell agreements.

It benefits the shareholders because the contract essentially buys out the shareholder. The contract also allows you to detail the terms regarding the transfer or purchase of the shares. The redemption agreement usually grants a close corporation the right of first refusal if an offer from a third party exists. This is a common arrangement in many close corporations. A redemption is a way to remove a specific shareholder in the corporation and preserve ownership amongst the remaining shareholders. One of the biggest issues in the redemption, particularly in small businesses, is what the appropriate valuation of the stock should be. Often the seller values the stock higher than the buyer (the corporation). That is, unless the shareholders already have in place a method to value the shares. A redemption agreement can also be contrasted with a stock purchase agreement between stockholders in a corporation, which is a way for one or more shareholders to individually buy the shares of one or more other of the shareholders in the corporation.

Documents Required

Passport Photo

Passport photo of all parties.

PAN Card

PAN card of all parties.

Aadhar Card

Aadhar card of all parties.

Utility Bill

Utility bill of Electricity or Telephone.

Address Proof

Valid Address Proof of all the parties.


Valid Driving Licence of all the parties.

Terms and Conditions

Terms and Conditions between the parties.

Other Documents

Other documents will be intimated through e-mail.


In finance, redemption describes the repayment of a fixed-income security such as a preferred stock or bond on or before its maturity date.

A redemption agreement protects the ongoing ownership of the company, specifying the transfer of ownership and shares of stock in the event a shareholder dies or leaves.

Redemptions are when a company requires shareholders to sell a portion of their shares back to the company. For a company to redeem shares, it must have stipulated upfront that those shares are redeemable, or callable.

The shares are then absorbed back into the corporation’s authorized shares, but are thereafter considered to be unissued.

Yes, Redemption agreements are legally binding.