Canopy Law > Shareholder Agreements > Voluntary transfer of shares

Voluntary transfer of shares

Usually shareholders will not be able to simply transfer their shares to someone else without the permission of the other shareholders. A Shareholder Agreement can list exceptions to this rule, such as a transfer from individual ownership into a family trust. Otherwise, a shareholder will need permission to transfer and the other shareholders are likely to get first option.

The reasons for this are understandable. If you set up your company with a business partner you would not want to find yourself suddenly in business with his best friend in the event that your former business partner suddenly decided to leave the company and move to France, in the process selling his shares to his friend, whom he may trust, but you don’t know.

A Shareholder Agreement can deal with what happens to that business partner’s shares if he does decide to leave. For example, maybe:

  1. the remaining shareholders get an option of first refusal to buy the shares
  2. the remaining shareholders must buy the shares from the departing shareholder
  3. the shares can be made available to outside investors

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