The Process of Selling Shares in a Company
There are various reasons for selling shares in a company, including to raise additional investment, realise the value of your investment or transfer ownership to someone else.
There are different types of share sales that can take place to facilitate these goals, including issuing new shares in a company you have an interest in, selling some or all of your shares back to the company or transferring your shares to another person.
Whatever the aims and type of a share sale, there is a strict legal process you must go through to protect your investment and the company while maintaining strict regulatory compliance.
Key steps for selling company shares
Reviewing articles of association and shareholders’ agreements
A company’s articles of association and/or its shareholders’ agreement should set out the agreed process for selling shares in the company. Such provisions will need to be carefully reviewed with the help of an experienced corporate lawyer before moving forward with a share sale.
Where a shareholder wishes to sell their shares, the other shareholders will normally have the right of first refusal to buy those shares before they can be offered for sale outside of the business. There may also be a requirement to allow the company first refusal on buying back the shares e.g. if an employee who is part of an employee ownership scheme is leaving the business.
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