Transfer of a business share
The following is required to transfer a business share:
- A share transfer agreement
- Certified signatures on the transfer agreement
- A resolution of the general meeting
- An application for entry in the Commercial Register
- Payment of the fee
Transferring a business share in a limited liability company requires a written agreement on which the signatures of both the transferors and the transferees have been certified by a notary. The agreement must satisfy a number of formal requirements.
In addition, registering the transfer in the Commercial Register requires one or two resolutions of the general meeting approving the transfer or the division or merger of the business share. The type and number of resolutions needed depend on the content of the company’s memorandum of association and the provisions of the Commercial Code.
Naturally, the transfer of the business share must also be entered in the Commercial Register, and an application for entry must always be drawn up for this purpose.
Transfer of shares
Transferring certificated shares requires:
- A share transfer agreement
- Endorsement of the shares on their reverse side
- Handover of the share certificate
- A resolution of the general meeting (in some cases)
- Notice of an offer to exercise the right of pre-emption
Endorsement is a formality whereby a statement is written on the back of the share confirming that the transferor transfers the share to the transferee, after which it is signed.
What to Consider Before Changing Shareholders
Bringing in a new shareholder, buying out a partner or selling a company are significant steps. In Slovakia, the formal process of transferring a share in an s.r.o. or shares in a joint-stock company is clearly defined, but the commercial and legal questions around the transfer deserve just as much attention. Careful preparation protects both the buyer and the seller.
Check the Company’s Founding Documents
The articles of association or founding deed may contain rules that affect the transfer, such as restrictions on transfers to third parties, a requirement for the consent of the general meeting or pre-emption rights for existing shareholders. These provisions must be respected, otherwise the transfer could be challenged.
Due Diligence for Buyers
If you are acquiring a share in an existing company, it is wise to look closely at its situation before signing. Points to review include:
- Outstanding tax and social security obligations
- Debts to suppliers, banks and other creditors
- Pending disputes or proceedings
- Whether the share capital has been fully paid
- Contracts that could be affected by a change of ownership
- The accuracy of the company’s accounts
Price and Payment
The transfer agreement should clearly state the price and how and when it will be paid. Where the price is paid in instalments or depends on future results, the agreement should address what happens if payment is not made. The tax implications of the sale for the seller should also be considered.
After the Transfer
Once the transfer has been registered, other changes often follow, such as appointing new executives, changing the registered office or updating information held by banks and authorities. It may also be necessary to update records of beneficial ownership. Planning these steps together can save time.
Transfers Involving Foreign Parties
If the buyer or seller is based abroad, documents may need to be legalised and translated, and signatures certified in the appropriate way.
Planning a change of shareholders in a Slovak company? Contact eTuls. We will prepare the transfer agreement and resolutions, arrange registration and help with any follow-up changes.