Buying and selling of the shares

BY / IN Areas of activity, Legal Services For Business

2016-07-28

Shares are securities confirming the right of their owner (shareholder) to share in the management of the company, unless otherwise provided by law, the right to receive divided, the right to a portion of company’s assets remaining after the liquidation and other statutory rights. Transfer of Shares. Certificated shares or share certificates shall be transferred into the ownership of other persons by making a relevant entry in the share or in the share certificate, i.e. the endorsement. The endorsement shall contain the particulars of the transferee (full name, personal code of a natural person; name, registered office, legal form, code of a legal person), as well as the date of such entry. The endorsement shall be signed by the transferor and the transferee of the share or the share certificate. The transfer of uncertificated shares shall be recorded by entries in personal securities accounts of the transferor and the transferee.

Having concluded the transaction on the transfer of book-entry shares, the parties to the agreement must provide their account managers with a written agreement indicating, inter alia, the following:

  • the name, legal form, code and registered office of the company the shares whereof are being transferred;
  • the number of transferred shares according to their classes and their nominal value;
  • in case of shares of a public limited liability company, the share issue code assigned by the Central Securities Depository of Lithuania;
  • the amount of dividend on preference shares, voting and other rights.

Any agreement which does not contain any of the particulars referred to in paragraph 3 shall be void from its conclusion and the account managers shall not be entitled to make any entries thereunder. Requirements laid down in paragraphs 3 and 4 shall not apply to share transfer agreements concluded on the securities exchange. A person who subscribed for the shares before the registration of the incorporation of a company or before the registration in the Register of Legal Persons of the amendments to the Statutes as the result of the increase in the statutory capital shall not be entitled to transfer his shares to other persons. A shareholder shall not be entitled to transfer his partly-paid shares to other persons. Transactions of shares can only be performed by persons with legal capacity. Transactions of shares are subject of the specific requirements. Transactions in securities, if they consist of one of the spouses, the other spouse’s consent is required. Such a transaction without the consent of the other spouse may be declared null and void regardless of whether the counterparty is fair or unfair.

Specifics of Share Transfer in Private Limited Liability Companies.

 

A shareholder must give a written notice to a private limited liability company of his intention to sell all or a part of the shares in a private limited liability company and indicate the number of shares being transferred according to their classes and sale price. The right of pre-emption to acquire all shares offered for sale in a private limited liability company shall be vested in the shareholders who, on the day of receipt of the shareholder’s notice of his intention to sell shares in a private limited liability company, held shares in the company, unless the Statutes provide otherwise. Within 5 days after the day of receipt of the shareholder’s notice of his intention to sell the shares, the manager of a private limited liability company must inform every shareholder against acknowledgement of receipt or by a notice sent by registered mail, indicating the number of shares offered for sale according to their classes, the proposed sale price and the time limit for the shareholder to notify the company of his wish to purchase the shares offered for sale. The time limit may not be less than 14 days and more than 30 days after the day of dispatch of the notice or the letter of the company. Within 45 days after the day of receipt of the shareholder’s notice of his intention to sell the shares, the manager of the company must notify the shareholder of the wish of other shareholders to buy all of his shares offered for sale. If one or more shareholders of a private limited liability company expressed their wish to purchase all shares offered for sale by the shareholder in the private limited liability company, the shareholder must sell these shares to the shareholders (one or more) who expressed their wish, while the shareholders who expressed their wish must purchase all these shares at the price not lower than that indicated in the notice, effecting the payment within 3 months from the day of receipt by the company of the notice of the intention to sell the shares, unless otherwise agreed with the shareholder who is selling the shares. The seller of the shares shall be entitled to require the buyer to furnish a security of the payment equivalent to the price of shares (bank guarantee, collateral, etc.). If the demand of shares offered for sale exceeds their supply, the shares shall be allotted to the shareholders wishing to acquire new shares in proportion to the number of shares held by them. If, within the time limits laid down in this article, the manager of a private limited liability company informs the shareholder that other shareholders do not wish to acquire all the shares offered for sale or fails to submit the notice, the shareholder shall be entitled to sell the shares at his own discretion at the price not lower than that indicated in his notice of the intention to sell the shares.

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