Permitted Transfer Of Shares
Our solicitors are vastly experienced in assisting companies of all sizes to facilitate and advise upon the situations that may give rise to the permitted transfer of shares. At Blackstone Solicitors, we are able to advise many different types of client in the share transfers of a company, no matter the complexity of the documentation involved.
For more information about how our team of corporate solicitors can help in the share transfer process, contact us on 0345 901 0445 or complete our online enquiry form and a member of the team will call you back at a convenient time.
In any company where there are two or more shareholders, it is important that share transfer provisions are included in the company’s articles or in a shareholders’ agreement. Rules need to be set out to cover the three methods of share disposal. These include the sale of the shares, a gift and dealing with the death of a shareholder and the transfer of their shares.
Blackstone Solicitors are known for our efficiency, attention to detail and ability to get things done; qualities much needed when dealing with the transfer of shares. We will provide professional, pragmatic advice based on our years of experience in this specialist area.
Our team will do all that is necessary to ensure you are properly represented in any documentation and will put your interests first at all times. The transfer of shares in a business can be highly technical and can sometimes involve different areas of law and regulations; we can advise on all these areas and make sure you are in the best possible position for a successful outcome.
Why Legal Help is Important
It should be remembered that the permitted transfer of shares can take place in companies of any size and in any industry.
The process can be complex, potentially stressful and can be considered to be an incredibly important process that will have an impact on you and your business, both in the short and long term – it is therefore imperative that you have the best legal experts at your side, not only to ensure everything progresses as it should, but also to make sure both you and your business benefits from the best possible outcome.
There can be a number of transfer provisions within the articles of association or shareholders agreement and in reality, almost anything can be drafted. However, the following clauses are amongst those most commonly encountered when considering share transfers:
All Members must consent
In this instance, shares cannot be transferred without the written consent of all shareholders. Whilst this system may work in a small private company, it could prove problematic where the number of shareholders increases.
Directors can refuse a transfer
The decision to refuse a transfer must be made by directors collectively with one vote per director. The directors must also be capable of passing a collective resolution and notify the transferee as soon as practicable and in any case within two months. The reason for refusal must be provided even if the articles say to the contrary (Companies Act 2006, s. 771).
Provisions for families
Some articles allow the transfer of shares to family members, the definition of which will be set out in the articles or shareholders agreement. Transfers to anyone else are subject to restrictions.
Typically, these provide that shares must be offered to existing shareholders in proportion to their present shareholdings.
Drag along and tag along
A drag along clause says that if the holders of a particular majority of the shares want to sell to someone who wants to buy the whole company, the other shareholders must sell their shares at the same price.
A tag-along clause says that if the majority sell their shares the minority shareholder(s) are entitled to sell theirs on the same terms. Drag along and tag along clauses tend to be included together but can be included separately.
If a shareholder dies
Unless the company’s articles provide to the contrary, the provisions on share transfer apply also when a shareholder dies (which is called “transmission” of the shares). If the articles have no restrictions on transfer, or they are impossible to enforce, a shareholder can leave the shares by will (or if there is no will, they will follow the rules of intestacy). Similarly, if the articles say the directors have the discretion to refuse to register a transfer, this will also apply when a shareholder dies, as will any other restrictions.
It is very important that shareholders agree what is to happen to the shares if a shareholder dies, and that they ensure that the agreement is reflected in both the company documents (either the articles or a shareholders’ agreement) and the shareholder’s will. If this is not done, the dependants of a deceased shareholder can be left in a distressing, and possibly very expensive situation when also having to deal with all the other issues arising when someone dies.
Whatever the circumstances are of the permitted transfer of shares, we ensure full compliance with corporate laws and regulations, so that you can be sure that the process is addressed on a firm financial and legal basis.
We will work with you to ensure all financial, tax and legal aspects of the transferring of shares is properly managed. We are able to assist with any aspect of this and will guide you through the technicalities in a clear and concise way. We have a team of experienced solicitors well versed in the process who are ready to assist you.
Get in Touch
Find out more about our services and how our corporate solicitors can assist you and your business by getting in touch. We have offices in Cheshire and London and are able to serve clients across the North West, including Chester and Manchester, as well as throughout the UK and also overseas.