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mrazova-share-transfer-restricti
Share transfer restrictions in
closely held corporations: shareholders‘ protection and exit strategies.
JUDr. Žofia Mrázová, PhD.,
MCL, Department of Commercial and Economic Law, Faculty of Law, Pavol Jozef
Šafárik University in Košice.
Právny obzor, 105, 2022,
special issue, pp. 29-43
Published online: 20.2.2023
https://doi.org/10.31577/pravnyobzor.specialissue.2022.03
Abstract. Share transfer
restrictions represent a typical characteristic of closely held corporations and
family businesses. Default provisions of Slovak law on share transfer in limited
liability companies creates a broad scope for drafting individual types of
restrictions in a most creative variety of manners. When opting for a specific
share transfer restriction, shareholders should not only focus on the primary
interest of maintaining a stable personal structure of the company with a view
of protecting the business from the entry of unwanted third parties, but also
take into account potential exit scenarios which – in closely held corporations
– often are the only possibility to resolve an ongoing conflict of interests
between the shareholders. Therefore, when forming a company, the author assumes
it is important to carefully and precisely draft the selected type of share
transfer restriction in the corporate contract or shareholders’ agreement to
properly resolve potential conflicts among shareholders and allow smoothly exit
of affected party. Also, shareholders should not neglect to consider the
occurrence of situations when statutory restrictions affect the share transfer,
and vice versa, when a stipulated share transfer restriction may be unlawful or
unenforceable.
Keywords: share transfer
restrictions, close corporations, limited liability company, articles of
association, contractual freedom, pre-emptive rights, shareholders´ agreements
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ISSN 2729-9228
(online)
ISSN 0032-6984
(print)
THEORETICAL REVIEW FOR ISSUES OF STATE AND LAW.
Právny obzor is peer-reviewed journal and is indexed in SCOPUS and HeinOnline database (INDEX TO FOREIGN LEGAL PERIODICALS).
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OPEN ACCESS