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Afzal (Manager)     04 October 2011

Memorandum of understanding

Dear All,

My query is, 'As per Indian law, does an MoU between an Indian company and a foreign company has to be executed on stamp paper?' Next, if the MoU is combined with NDA, will it make any legal difference, if not on stamp paper?'

 

Thank you

Afzal



Learning

 3 Replies

dhruva (Lawyer)     05 October 2011

a. That depends on which governing law would you wish to conform to. If the parties wish to conform to the laws prevailing in India then it is obvious that the relevant stamp regulations in India are applicable.

b. Normally an MoU is very limited in scope. In fact in many quarters the view is that an MoU is only a preliminary in principle understanding not to be considered as a fully structured agreement. However if the MoU in its construction has in place all the elements of a detailed agreement including the terms of Non Disclosure then it flows that the same is complete in all aspects. Accordingly it would have to be stamped (this provided the same satisfies the criteria in clause a. supra)

Afzal (Manager)     05 October 2011

Dear Dhruva,

Thank you very much for your clear and precise answer.

Regards,

Afzal

Anumita Sarkar (Tax Advisor/Litigator)     06 October 2011

It is always preferable that you execute a separate Non-dislosure agreement.  You may just simply incorporate a clause namely 'confidentiality' in MoU to make the same binding on both the parties.


For the NDA, look out for general formats or consult a lawyer to draft the same.

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