Transfer for Shares Agreement
When you have a business and there are shares involved in it, then you want to learn more about Transfer for Shares Agreement. Never underestimate business arrangement between several people, investors, or share owners. Business generally means money and it usually means a lot of money involved,
Understanding the Concept
Also known as Share Transfer Instrument, the Transfer for Shares Agreement is a written document that is needed for shares transfer within a company. It contains the details of the party transferring or selling their shares to the others, the value or cost of each transfer, the amount of transferred shares, the company whose shares are being transferred, and such thing alike.
Shares are the identifiable and fixed units of capital representing the member’s portion or stake within the company. When you have (or buy) a share, you automatically become the member of the company. You have the rights to transmit and transfer the shares. You can only transfer what’s yours – and not more. For instance, you have 500,000 shares in the company. It means you can only transfer that much. Transferring 600,000 would be considered impossible.
Not all shares are transferable. There are 2 types of transferable shares:
- Ordinary shares. This one has a ‘low’ rank when compared to the preference shares. The share holders don’t get a fixed amount of money (the dividend).
- Preference shares. This one enables the holders to get a fixed dividend. When there is payment, the preference share owners get the money first – and then the ordinary share holders.
Who Can Use the Agreement Document?
Not everyone can use the share transfer document. Only these ones can use the document:
- Private company limited by shares. This is the most general and common company type. The members’ liability is limited (by the shares) they hold within the company that remains unpaid. The members are between 2 members and 50 members – and not more than 50. The company can’t offer the shares to the public. The company’s name must end with Limited
- Public company limited (by shares). This is almost the same as the previous company but this one can offer the shares to public. The membership isn’t limited either. The company’s name must end with PLC.
- Unlimited Liability Companies. The company doesn’t restrict the members’ responsibilities toward the company. The name must end with Unlimited.
If you feel that getting the document can be quite overwhelming, then you can find the templates below. We have our various types of Transfer for Shares Agreement templates for you to use.