Disposal of shares/shares

The concept of shares / Shares / Disposal of shares / How we can help you

Concept of shares/shares

For the entire duration of a company’s existence, regardless of its form (limited liability company, joint-stock company), it has a share capital, determined in accordance with the law and the articles of association.

The share capital is the value of the assets contributed to the company by the members/shareholders for use by the company for its own business purposes. The formation of share capital is the basis for acquiring the status of partner/shareholder in a company. At the time of drawing up the documents relating to the establishment of the future company, the future partners/shareholders determine the nature and extent of the share capital and decide on the assets to be contributed to the company.

Contributions to the formation of a company can be in cash (various sums of money), in kind (various movable or immovable assets) or in kind (certain services provided by one of the partners, such as carrying out a certain activity).

Each type of contribution is valued and taken into account in the formation of the company’s share capital. In exchange for contributions made by shareholders, regardless of their type and nature (e.g. deposit of a sum of money in the company’s account, transfer of ownership of a building, transfer of the right of use of production equipment, etc.), the company issues and transfers to the shareholders parts of the share capital called shares (in the case of limited liability companies) or shares (in the case of joint stock companies).

In other words, in exchange for the assets contributed to the company, the contributors receive shares in the company and thus become partners/shareholders in the company.

What should be noted is that shares are issued by the company and are transferred to the shareholders and their number influences the benefits offered by the company (e.g. share of voting rights, share of dividends, etc.). The total number of shares represents 100% of the company’s share capital.

Disposal of shares/shares

Since the shareholders are the owners of the shares issued by the company, they can dispose of them as they see fit (e.g. they can alienate them, encumber them with a mortgage, leave them to a person by will, etc.).

The concept of transfer of shares means the transfer of ownership of shares from the original shareholder to one or more persons (either other shareholders or third parties to the company).

The transfer may be for consideration, in the sense that in exchange for the transfer of ownership of the shares the shareholder receives other assets (e.g. money representing the price of the shares) or free of charge, in the sense that in exchange for the transfer the shareholder receives nothing (e.g. in the case of a gift to a close relative).

A classic case of a share deal is the so-called “share deal”, when a company is taken over by another company. There are very many situations where investors prefer to acquire a company as a whole, as a legal entity, rather than acquiring its assets en bloc.

For more details on how to check a company before you buy it, please go to Checking a company’s status.

Depending on the legal specifics of each company and on the provisions of the articles of association, the transfer of shares may be free and unconditional or may be subject to certain conditions, either laid down by law or laid down in the company’s articles of association.

For example, in the case of a limited liability company, the transfer of shares can only take place with the consent of the other shareholders. This restrictive measure is explained by the fact that limited liability companies were conceived by the legislator as being based on certain close relationships between the partners. In other words, in the case of these types of company, the relationship between the partners and the trust placed in each other with a view to the joint conduct of trade by means of a company is very important.

In the case of public limited companies, whether listed or not, the transfer of shares is free and unconditional. This freedom is explained by the fact that the legislator has regarded public limited companies as companies where capital is more important than the relations between shareholders. In many cases, especially in the case of listed companies, the shareholders do not even know each other.

From the above rules the associates/shareholders may derogate, under the conditions permitted by law, by means of the provisions of the articles of association. For example, the shareholders of a particular company may decide that if one of the shareholders wishes to dispose of his shares, he must grant a pre-emptive right to the other shareholders.

A change in the structure of the associates/shareholders also implies a change in the company’s corporate documents (e.g. articles of association, register of shareholders, etc.), in which case the updated documents must be registered with the commercial register for public disclosure.

For more information on how to register the change of partners/shareholders with the trade register please go to the section Registration with the trade register.

How we can help you

Our team of lawyers together with specialists in the relevant fields (e.g. business valuation experts, accountants, financial auditors) can advise you on the transfer of certain shares, including the takeover of a company or a chain of companies:

• verification of the company’s legal situation;
• checking the company’s tax situation;
• to establish all the necessary operations for the transfer of shares;
• drawing up transfer documents;
• modification of company documents;
• registration of changes in the commercial register.

Additional information on the transfer of shares / shares