Triggering Events for Share Sales in Shareholder Agreements by Megadox

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Learn about the types of events which trigger a sale of shares under a Unanimous Shareholder Agreement, and the methods used to implement the sale.
Triggering events include:
- right of first refusal;
- default buy-sell;
- shotgun or forced sale;
- transfer on death.
Triggering Events for Share Sales in Shareholder Agreements is a downloadable MS Word file.

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									                      UNANIMOUS SHAREHOLDER AGREEMENTS
            EXAMPLES OF TRIGGERING EVENTS FOR SALE OF SHARES

                    Example #1 - Sale of Shares to Other Shareholders
Triggering Event:
     Shareholder wants out and offers his shares for sale to one or more other shareholders.


Provisions & Method of Implementing:
     USA should provide that change of voting control (and therefore transfer of shares
      among shareholders) is subject to shareholder approval.
     Terms should be the same for all.
     Notice to all shareholders.
     If no one accepts, then shareholder must seek to sell to a third party, invoking the Right
      of Refusal process.
     If one or more shareholders accept the offer to sell, then all other shareholders have the
      option to buy shares on the same terms in the same proportion as their existing share
      ownership. If exercised by fewer than all other shareholders and if consented to by
      shareholders opting not to purchase, then purchased in equal shares by those shareholders
      opting to buy shares.
                                              -2-


                             Example #2 - Right of First Refusal
Triggering Event:
     One shareholder wishes to sell his shares to a third party. Bona fide offer tabled.


Provisions & Method of Implementing:
     Right of First Refusal triggered for all shareholders. Disclosure of terms to all
      shareholders.
     If exercised by all shareholders then shares purchased in proportion to current
      shareholdings.
     If exercised by fewer than all other shareholders, then purchased in equal shares.
     If exercised by no one, then the transfer to a third party may proceed, provided that the
      third party enters into the Shareholder Agreement.
                                              -3-


                              Example #3 – Default Buy – Sell
Triggering Event:
     One or more of the shareholders aren’t keeping up with their obligations under the
      Shareholder Agreement.
     “Complaint” made by a shareholder to 
								
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