Are founding shareholders allowed to transfer shares?

Article overview

The right to transfer shares is a privilege of shareholders in companies, especially for founding shareholders. However, the transfer of shares by founding shareholders must comply with specific provisions of the law. So, are founding shareholders allowed to transfer shares or not? Let’s find out the details with Long Phan in the following article.

Regulations on transfer shares for founding shareholders
Regulations on transfer shares for founding shareholders

What are the regulations on founding shareholders in joint stock companies?

Pursuant to Clause 4, Article 4 of the Law on Enterprises 2020, founding shareholders are shareholders who own at least one common share and sign in the list of founding shareholders of a joint stock company.

In addition, according to the provisions of Article 120 of the Law on Enterprises 2020, to become a founding shareholder, you must meet the following conditions:

  • Own at least one common share;
  • Sign on the list of founding shareholders of the joint stock company;
  • Together with other founding shareholders, they must register to buy at least 20% of the total number of common shares authorized to be offered for sale at the time of business registration.

Conditions for founding shareholders to transfer shares

First, for ordinary shares transfer:

According to Point d, Clause 1, Article 111 of the Law on Enterprises 2020, founding shareholders transferring common shares meet the following conditions:

  • Within 3 years from the date the company receives the Business Registration Certificate, common shares of founding shareholders are only allowed to be transferred to other founding shareholders.
  • Transfers to people who are not founding shareholders can only be made if there is approval from the General Meeting of Shareholders.

Second, transfer of preferential voting shares:

Pursuant to Clause 3, Article 116 of the Law on Enterprises 2020, voting preference shares cannot be transferred, except in cases of transfer according to legally effective decisions, judgments or inheritance.

Thus, founding shareholders are allowed to transfer shares. However, for common shares within a period of 03 years and voting preference shares, there are certain transfer restrictions.

Conditions must be met for founding shareholders to transfer shares
Conditions must be met for founding shareholders to transfer shares

Procedure for transferring shares of founding shareholders

According to the provisions of the Law on Enterprises 2020 and Article 58 of Decree 01/2021/ND-CP, the transfer of shares of founding shareholders is carried out internally within the company, except for the transfer of shares by foreign investors. in an unlisted joint stock company

Accordingly, procedures for notification of changes in shareholders in the company must be carried out. Specifically as follows:

Share transfer records

Pursuant to the Law on Enterprises 2020 and Decree 01/2021/ND-CP, the shareholder change notification dossier includes the following main documents:

  • Decision of the General Meeting of Shareholders on the transfer of shares;
  • Minutes of the meeting of the General Meeting of Shareholders on the transfer of shares;
  • List of founding shareholders of joint stock companies;
  • Company Charter (Amended and supplemented);
  • Share transfer contract;
  • Minutes of liquidation of share transfer contract;
  • Share certificates of company shareholders;
  • Register of shareholders.

Steps to transfer shares

According to the provisions of the Law on Enterprises 2020, the process of notification of change of shareholders goes through the following steps:

Step 1: Organize a General Meeting of Shareholders to decide on the transfer of shares.

Step 2: Related parties will sign a share transfer contract.

Step 3: After signing the contract, proceed to pay the transfer price.

Step 4: Update shareholder information in the company’s Shareholder Register by editing and adding necessary information.

Steps to transfer shares
Steps to transfer shares

Accurate share transfer consulting service at Long Phan

With an experienced team, Long Phan will advise in detail the steps, guide you to prepare complete documents, and follow the correct process in share transfer transactions. Consulting and support services at Long Phan include:

  • Advise in detail the steps, guide you to prepare complete documents, and properly follow the share transfer process.
  • Support in drafting and appraising documents such as transfer contracts, minutes of meetings of the General Meeting of Shareholders, and shareholder registration books.
  • Representing you in share transfer transactions, negotiations and negotiations with the transferee.
  • Consulting on personal income tax obligations arising from the transfer of shares.
  • Consulting on other issues related to share transfer.

Transfer of shares is an important process that shareholders need to understand to ensure their rights in the company. If you need advice or support in carrying out this procedure, please contact Long Phan via the hotline 0906735386. We are always ready to support you quickly and conveniently, while ensuring maximum benefits during the share transfer process.