Selling company shares can be very complex and requiring specific legal knowledge for a smooth transaction. If you’re a shareholder and are thinking of selling company shares either back to your company or to someone else, then take a couple of minutes to continue reading. We’ll keep the wording plain, with minimal basic terms.
If you’ve got shares from a privately held stock and are thinking of selling them, you need expert advice as well as a business lawyer with expertise in the corporate field, dealing with SMEs and large companies.
You can sell your shares back to the company you work with, but you can also sell them to another shareholder or even an external investor. If there are shareholders in your company, then by default there should be a shareholders agreement. You need a business lawyer to read the agreement and explain it in plain English what your options and rights are in relation to the shares you hold.
In order to sell your shares, you will have to have in place an SPA or Share Purchase Agreement which can be drafted by your business lawyer. Other procedural formalities might include the Stock Transfer Form and the Share Certificate. One phone call and a business lawyer can give you a brief summary of what you need to get the ball rolling.
If the other shareholders in the company are not interested in your shares, depending on the shareholders agreement wording, you may be able to sell your shares to an external investor. Do remember that it’s in your best interest to have your shares valued and purchased at their standard value. If it happens that the company’s shareholders should offer an unreasonable price, your business lawyer can help you with the evaluation of your shares. You should sell your shares for their real value to either another shareholder or an entity outside the company.
Bear in mind that it’s not in the shareholders interest to have an external investor join the company’s shareholders committee. The shareholders should agree on the right value for your shares and either buy your shares or allow you to sell them at a good value to an external entity. If you are able to sell the shares at at the right value to an external investor, then the shareholders haven’t got a choice but to accept the new shareholder. Everything depends on the wording of the shareholders agreement.
Another case scenario is if you would like to gift your shares to another member of staff, who may subsequently become a director or the director of the company. Remember that if you’re a director and the person you’ve nominated to purchase your shares is an employee, you can gift those shares as ‘benefit in kind’ but the employee will potentially be liable for income tax and national insurance. You will need to consult with your business lawyer, who will be equipped to advice you in relation to tax.
If you are planning to sell shares, consult with one of our business lawyers to check through your shareholders agreement and explore your options. A business lawyer will help you to be compliant and at the same time profit from parting company with your business and shareholders. SG
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