According to the Law on Companies of the Republic of Lithuania, shares are securities confirming the right of their owner (shareholder) to participate in the management of the company, unless otherwise provided by law, the right to receive dividends, the right to part of the company’s assets remaining after liquidation and other statutory rights.
The transfer of shares is formalized by a contract, which requires a simple written or notarial form. Since 2015 January 1 Article 1.74 of the Civil Code of the Republic of Lithuania. 1 d. 3 p. it is provided that for UAB share purchase and sale agreements, when 25 percent or more of UAB shares are sold or the sale price of UAB shares exceeds EUR 14,500, such transactions are registered with a notary or account manager.
What shares can be transferred? The shares of a private limited company, whether tangible or intangible, may be transferred only when the following conditions established in Article 46 of the Law on Companies of the Republic of Lithuania are met:
- the transferable shares are fully paid;
- the company whose shares are being transferred or the articles of association, which increase the authorized capital of the company, are registered in the Register of Legal Entities.
A transaction by which unpaid shares are transferred is contrary to an imperative rule of law and is therefore void. It should be noted that only the shares to be transferred must be fully paid. If a company has several shareholders and only one of them has not fully paid up its shares, the other shareholders, having duly fulfilled their obligations to pay for the shares, may transfer the shares held in accordance with the established procedure. The procedure for the transfer of shares of a private limited company is, in principle, regulated by Article 47 of the Law on Companies. In the general case, the transfer of shares of a private limited company consists of the following stages:
- notification of the shareholder to the company about the intention to sell the shares;
- notification of the company to other shareholders about the stated intention to sell the company’s shares;
- notification by shareholders of the wish to exercise the pre-emptive right to acquire the transferable shares of the company or the refusal to exercise this right;
- signing a share transfer transaction;
- registration of changed data on the company’s shareholders.
Having decided to sell all or part of the shares of the private company, the shareholder must notify the company in writing of the intention to sell the shares, their quantity and price. It should be emphasized that when a company has one shareholder, there is no pre-emptive right for anyone, therefore it is not necessary to notify the company about the intention to transfer its shares. It is advisable to serve such a notice to the head of the company by signature or by registered mail.
Share transfer transaction
The share purchase and sale agreement is subject not only to the general requirements of the agreements, but also to specific requirements that must be complied with. The share purchase agreement of a private limited company must contain the name, legal form, its code, registered office, number of shares to be transferred by classes and nominal value of the company whose shares are being transferred. In the absence of these data, the share purchase and sale transaction is void.