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Ownership function of shares

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  • 16-06-2021 4:36pm
    #1
    newboard
    Registered Users Posts: 225 ✭✭


    Hi all,
    Probably a basic question here, but in the following scenario;

    Shareholder A owns 50 shares (50% of the company)
    Shareholder B owns 50 shares (50% of the company)

    Can shareholder A give some of their shares to a 3rd party (shareholder C), even if shareholder B does not want shareholder C to have any ownership of the company?

    In other words, are shares held the same as any other property, free for their owner to do what they want with?

    Thanks


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    #2
    awsah
    Registered Users Posts: 552 ✭✭✭awsah


    newboard wrote: »
    Hi all,
    Probably a basic question here, but in the following scenario;

    Shareholder A owns 50 shares (50% of the company)
    Shareholder B owns 50 shares (50% of the company)

    Can shareholder A give some of their shares to a 3rd party (shareholder C), even if shareholder B does not want shareholder C to have any ownership of the company?

    In other words, are shares held the same as any other property, free for their owner to do what they want with?

    Thanks

    Is it a plc? Is there a preemption clause in the constitution? Or anything in the constitution which restricts the sale of shares? The other shareholders may refuse to register the shares under section 95(1)(b) without giving a reason and shareholder A will remain title holder and will have to act in best interests of shareholder C

    That is about the extent of my knowledge of company law - open to correction


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    #3
    Peregrinus
    Registered Users Posts: 26,068 ✭✭✭✭Peregrinus


    If it's a public limited company, shares must be freely transferrable.

    If it's a private company (and with 100 shares and just two shareholders it pretty certainly is) then the articles of association can impose restrictions on the transferrability of shares, and they invariably do. The usual restriction is that share transfers have to be approved by the board of directors and if, as I assume, the two members are also the two directors, then if shareholder Bobjects he can block the transfer. If they can't sort the matter out in subsequent negotiations, shareholder A either drops the matter or heads off to court to complain that he is being oppressed, and the whole matter gets thrashed out there.


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