Transfer of Shares to a New Owner

The provisions of the Limited Liability Companies Act aim at promoting the exchange of shares. The freedom of exchange prevails as the main rule. This means that a share is freely transferable and acquirable. There are, however, restrictions on the freedom of exchange, being both statutory and such based on the provisions of the articles of association. Statutory limitations are found both in the Limited Liability Companies Act (e.g. restrictions on acquisition of own shares) and in other legislation (e.g. regulations of the Security Markets Act).

In the articles of association the freedom of share exchange may be restricted only by way of redemption and consent clauses ([Redemption Clause] and [Consent Clause]). An amendment of the articles of association in such a way that the exchange of already issued shares will be restricted by redemption or consent clauses requires the approval of all shareholders or, in addition to the qualified majority voting requirement of two-thirds of the votes cast and the shares represented at the general meeting of shareholders, the consent of all shareholders whose shares the amendment concerns.

The share certificates, interim certificates and option or share issue certificates are securities and the provisions of the Promissory Notes Act relating to negotiable promissory notes are applied to them if they are conveyed or pledged. The bearer of a share certificate or an interim certificate is presumed to possess the right of the creditor provided that he/she is able to establish an unbroken series of transfers extending to him/her. In practice, a share certificate, which includes notation of the transfers extending to the bearer, creates to its bearer the rights belonging to a shareholder of the company. When acquiring shares in a limited liability company, one should always make sure that proper endorsements are made to the share certificate. See further in [Types of Promissory Notes].