How should you sell minority interests in a company?
As a minority shareholder, are you considering how to withdraw from a company? One option is to sell the shares. However, before taking a decision, pay attention to several important elements that may have an impact on the sales procedure. Read our article, and you will know what activities should be performed before the sales of minority interests.
1. Check the articles of association
First of all, analyse the articles of association, which usually regulate such issues as:
- consent of the company’s body (usually the management board or shareholders’ meeting) to the sales of shares by the shareholder,
- preemptive right or priority right to purchase shares by other shareholders,
- requirements that must be met by potential purchasers (e.g. holding specific permits or concessions).
2. Verify additional agreements
Determine whether the shareholders have made any additional agreements that may include provisions regarding the sales of shares. This is important, as an agreement may supplement the provisions regulated in the articles of association in the scope of restrictions on the disposal of shares or other provisions concerning the sales procedure.
3. Assess restrictions on the freedom to sell shares
The provisions contained in the articles of association or shareholders’ agreements often give the shareholder holding the majority of the shares the possibility to block the sales of minority shares to external entities. In such a situation, the only way to withdraw from the company may be the sales of minority shares to the majority shareholder or their redemption.
4. Determine the value of shares
Your next important step is to determine the value of your shares. The company’s valuation will make it possible to check the value of your shares, which will help you determine the strategy of activities you should perform to sell them. As a minority shareholder, you should have knowledge of the value of your shares, as, with this, you will be able to assess whether the other shareholders can buy your shares, whether their offers are reasonable, and what their actual intentions are.
5. Share sales agreement
When a share sales agreement is to be made, remember that the sales agreement should be made in writing with signatures certified by a notary, otherwise it will be null and void. Then inform the company about the transfer of the ownership title to the shares. You can determine with the purchaser of the shares who will submit the statement on the transfer of the ownership title to the shares. The last step consists in the indication by the company’s management board of a new shareholder in the register of shares and the submission to the National Court Register of a request for change in the data concerning the composition of the company’s shareholders.