Shareholders' agreement between individuals: share transfers

by Practical Law Corporate

A standard clause that provides detailed provisions to regulate share transfers within a private company limited by shares, particularly where shareholders are individuals. Designed for integration into a shareholders' agreement or a company's articles of association, this standard clause establishes a clear framework for managing shareholder transfers. It outlines a pre-emptive transfer process, but also addresses permitted transfers, allowing for transfers to specific family members or trusts for succession and tax planning purposes under defined conditions. The standard clause also sets out compulsory transfer provisions triggered by events such as death, bankruptcy, or the departure of a service provider (distinguishing between "Good Leavers" and "Bad Leavers" to determine the applicable transfer price). The standard clause includes a detailed mechanism for the valuation of shares, including the appointment of an independent expert to determine the fair value of shares, providing crucial structure and protection for all parties involved.