Selling your shares in a UK private company requires you to take important and strict legal steps. The process is governed by company law, the company\u2019s Articles of Association, and often a shareholders\u2019 agreement.\u00a0Overlooking these rules can stall the completion of your share transfer, invalidate it or trigger disputes in the future. This article explores some key legal issues to consider when you are selling shares in a UK private company.<\/p>\n\n\n\n
When a shareholder sells shares, ownership transfers to the buyer, who pays the seller directly.<\/p>\n\n\n\n
The buyer does not become the legal owner of the shares merely by making payment.<\/p>\n<\/div>\n\n\n\n
The company must, where required, approve the transfer and update its register of members before ownership changes. Until the buyer is entered into the register of members of the company, the seller stays the legal owner of the shares.\u00a0<\/p>\n\n\n\n
However, the share buyer may obtain the beneficial interest in the shares before registration, even though legal title does not pass until the buyer is entered in the register of members.<\/p>\n\n\n\n
It is important to understand the differences between selling shares and a company issuing new shares<\/a>. When a company issues new shares<\/a>, it creates and sells additional shares itself. This brings new funds into the company. Existing shareholders will usually see their percentage ownership reduced as a result of this.<\/p>\n<\/div>\n\n\n\n Private companies do not have a set market price for shares<\/a>. Buyers and sellers will usually agree on the relevant price between themselves.<\/p>\n\n\n\n The price can depend on the company\u2019s past performance, expected future profits, and any commercial risks.<\/p>\n<\/div>\n\n\n\n In some companies, a shareholders\u2019 agreement sets out how shares must be valued. This may include a formula or an independent valuation. Where such rules apply, the parties must follow them.<\/p>\n\n\n\n\n\n Continue reading this article below the form\n <\/i>\n<\/a>\nDetermining the Price You Sell Your Shares For <\/h2>\n\n\n\n