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Shares are transferable property. Accordingly, they can be bought and sold. So a person holding shares in a company can sell all or part of his shareholding to another or several other persons.
The more usual reasons for transferring ownership of shares are as follows:
Restrictions
There may be provisions in the Articles of Association or the shareholders' agreement, restricting the sale of shares. Pre-emption rights are a common restriction in both documents. They mandate that a shareholder must first offer his shares to his fellow shareholders and not to a third party. Another example is the inclusion of a clause obligating directors to have a minimum shareholding.
Paid and Unpaid or partly paid shares and market value.
Shares are issued at a nominal value, usually £1. That nominal value can be deemed to be fully paid, partly paid or nil paid. So, as an example, a company issuing £1 shares 50p paid is receiving 50p for each share and may ask for the remaining 50p at some later date. The unpaid portion of a share is a potential liability to its owner.
The nominal value of a share does not reflect its market value. Any study of the price movements of shares traded on a stock market will show that shares are bought and sold for varying prices throughout the day. None of those prices equals the nominal value of those shares.
The procedure for transferring shares is as follows:
Valuation
It is important to bear in mind that when shares are being transferred, they need to be valued. You should consult your professional advisors before making a transfer.
Samples of the relevant documentation are attached below:
If you would like us to prepare your documents (Minutes of meeting, j10 or j30 for each class of shares), we offer the service for £x per document.
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