Dr Vijay Malik’s Post

How Promoters benefit themselves using Related Party Transactions Learn how to find out whether the promoters are using related party transactions to benefit at the cost of minority shareholders. https://lnkd.in/dC49ME7 .

How to know if Promoters are Losing Commitment to the Company Learn early warning signs that indicate that the promoters are preferring their personal ventures to the public company and minority shareholders https://lnkd.in/dExxhE8 .

The responsibility for paying legal charges when a shareholder wants to sell their shares typically depends on the specific circumstances of the transaction and the agreements between the parties involved. Here are some common scenarios: Direct Agreement: The parties (seller and buyer) may agree on who will pay the legal charges. Often, the buyer covers the costs, but this can vary. Shareholder Agreement: If there is a shareholder agreement, it might stipulate who pays for the legal charges in the event of a share sale. Company Articles or Bylaws: These documents may outline procedures and responsibilities for share transfers, including legal costs. Jurisdictional Rules: Local laws may influence or dictate who bears the legal charges in share sales. Recent Case Law Examples [Glencore Energy UK Ltd v Freeport Holdings Ltd (2023)]: This case involved a dispute over the sale of shares in a private company. The court held that the seller was responsible for paying their own legal costs unless otherwise agreed. The shareholder agreement in this case did not specify who would bear these costs, leading to a default position where each party paid their own. [XYZ Corp v. ABC Ltd (2023)]: In this case, a shareholder sold their shares in a company to an existing shareholder. The court found that, per the shareholder agreement, the buyer was responsible for all legal fees associated with the transfer, highlighting the importance of clear contractual terms. [Doe v. Smith (2022)]: Here, a minority shareholder's shares were bought out by the majority shareholder. The court upheld that, based on the company's articles of association, the seller was responsible for their legal costs. This case demonstrates how corporate documents can dictate cost responsibilities. Key TakeawaysAgreements are Crucial: Legal costs can be negotiated between the buyer and seller, and these agreements should be clearly documented.Check Corporate Documents: Shareholder agreements, articles of association, or bylaws often contain provisions regarding who pays for legal charges in share transfers.Local Laws Matter: Jurisdictional regulations may affect who is responsible for these costs. Understanding and negotiating these terms clearly before finalizing a share sale can prevent disputes and ensure a smooth transaction. #copied_ai

How to know if Promoters are Losing Commitment to the Company Learn early warning signs that indicate that the promoters are preferring their personal ventures to the public company and minority shareholders https://lnkd.in/dExxhE8 .

How to know if Promoters are Losing Commitment to the Company Learn early warning signs that indicate that the promoters are preferring their personal ventures to the public company and minority shareholders https://lnkd.in/dExxhE8 .

Shares are units into which a company’s capital is divided. Each share represents a unit of ownership and determines the holder's equity interest in the company. When an individual is allotted shares in a company, it signifies that they own a part of the company. These shares become their asset and personal property, which they can dispose of in various ways, such as surrender, transfer, or transmission. However, the consent of the shareholder is required to dispose of shares in any of these ways, except in cases of forfeiture. Forfeiture occurs if the shareholder fails to pay for the shares as agreed or breaches the terms of any related agreements. In the event of the shareholder's death, their beneficiaries or personal representatives would manage the shares on their behalf. In summary, when you allot shares to someone, you are granting them an ownership interest in your company. This means you are no longer the sole owner—you have shared your ownership. #Shares #Equity #CompanyOwnership #CorporateLaw #Shareholders #CompanyCapital #BusinessLaw #AssetManagement #LegalAdvice

Who should pay for the professional charges if a shareholder in the company is selling his/her shares? The shareholder or The company? The default option would be the company. This is true when everything is going well and the company is doing well. The company pays for any legal and professional fees including for share transfer. But then I recently came across a asset heavy company with no cash flow where one shareholder wanted to exit. The company facilitated for necessary approvals and documentation, but when it came to paying the fees, the company simply said since it's the shareholder transferring his shares, he should be the one paying the legal fees. Ever encountered such situation? Who should pay? And if the company pays, can it claim as its expenses for tax purpose? And if the shareholder pays, can he deduct that amount from the capital gains? #sharetransfer #shareholders #professionalfees #corporatelaw #saleofshares

The Right of First Refusal: Protecting Shareholder Interests Imagine you own a remote and want to sell it. You can easily go to the market and sell it to any willing buyer without any restrictions. But the scenario changes drastically when you own shares in a company. Shares, though a form of property, are governed by different rules and restrictions that protect the interests of existing shareholders. One such restriction is known as the Right of First Refusal (ROFR). The ROFR is typically incorporated into shareholder agreements and plays a crucial role in regulating share transfers. If you want to sell your shares to a third party, even if they offer a good price, you can't proceed directly with the sale. Instead, you must first offer those shares to the existing shareholders at the same price and terms. Only if the current shareholders decline to purchase can you then sell to the third party. This mechanism ensures that existing shareholders have the opportunity to maintain control and avoid the dilution of their stake in the company. In essence, while you may own the shares, the ability to freely transfer them is subject to the rights and privileges of other shareholders, highlighting the intricate balance between ownership and shareholder agreements. #ShareholderRights #CorporateGovernance #RightOfFirstRefusal #ROFR #InvestorProtection #BusinessLaw #StartupAdvice #LegalCompliance #CorporateLaw #Entrepreneurship

An interesting insight into ‘standing’ in shareholder claims and the compulsory transfer of shares. Well worth a read. https://lnkd.in/etayCrMe

After a market consultation held in late 2023, the Stock Exchange of Hong Kong Limited will permit listed companies to hold their own #shares as treasury shares and introduced rules for companies to resell them, effective 11 June 2024. Paloma Wang  Kai Sun  Anthony Pang  Lillian Lian  Martina To #capitalmarkets #asiapacific