In order to safeguard the interests of shareholders and stakeholders of a company, sometimes the best option to prevent the entry of new shareholders is to restrict the transfer of shares.
For this purpose, it is crucial to keep in mind that:
1. If the partners do not agree on anything in the articles of association, the law establishes a free sale regime in favor of specific people (other partners, the spouse, ascendants, or descendants of the selling partner).
2. When the sale is in favour of other people apart from the ones contemplated above, there is only a preferential right of acquisition in favour of the other shareholders and the company itself. Therefore, if the shareholders wish to prevent the entry of third parties, they must bear the cost of such acquisition.
On the other hand, if one wishes to be more restrictive – for example, because of a desire for a a lasting link of the founding shareholders – additional restrictions on transfer can be included in the articles of association.
However, it is not possible to provide for a prohibition of sale outright nor to provide for agreements so restrictive that they, in practice, acts as a ban.
In a limited company, a total prohibition on sale can be established in two cases:
- The articles of association can include a total prohibition of sale during the first five years after incorporation.
- It is possible to prohibit the transfer of shares by inter vivos acts (acts such as an inheritance or forced transfer, an example of the last one would be a seizure, are excluded), provided that the shareholders are granted the right to withdraw from the company at any time.
In this case, the formula for calculating the shares’ value should be agreed upon in the articles of association, as the SL will acquire the shares of the separating partner.
If these restrictions are not included in the articles of association, they can be included later by unanimous agreement of all the partners.
Although, if a bona fide third-party buys shares before the registration of the agreement in the Commercial Register, the sale will be valid.
If you have any doubts regarding this issue, bear in mind that you can rely on Leialta to help you.
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