Share transfers in joint-stock companies are subject to different validity requirements depending on the share type. This article addresses the core rules for registered and bearer shares.
Share transfers in joint-stock companies vary according to the type of share and the provisions of the company’s articles of association. For registered shares, endorsement and transfer of possession together with registration in the share ledger are important, while bearer shares are transferred through the transfer of possession.
The most common problems in practice arise from overlooking transfer restrictions (lock-up provisions) in the articles. Where transfers are subject to board approval, managing the process correctly is critical to the validity of the transfer.
Particularly in transactions that change the ownership structure, supporting share transfer agreements with representations and warranties and completing the required corporate resolutions prevents future disputes. Professional legal counsel minimises risk at every stage of the transaction.
