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VIC Can Company Directors Proceed with Issuing Shares?

Discussion in 'Commercial Law Forum' started by davinx3, 20 April 2017.

  1. davinx3

    davinx3 Member

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    When the company was formed, it was expressly agreed that shareholders would not be able to sell their shares to persons other than existing shareholders. However now, the directors would like to issue shares to persons who are not presently shareholders of the company.

    1) Can the company directors proceed with issuing the shares?

    2) If a shareholder sold his shares to a non-member, is the directors obligated to register this transfer of shares?

    Thank you.
     
  2. Rod

    Rod Well-Known Member

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    Without having seen any documentation:

    1) No. It is a matter for shareholders to vote on, not directors.
    2) No

    However the wording of the shareholder agreement and constitution is important. You may need legal advice.
     
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  3. Rob Legat - SBPL

    LawTap Verified Lawyer

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    Also, be aware that selling already issued shares is different to the issue of new shares. If there is a restriction on the sale of issued shares, it does not necessarily mean that the same restriction applies to the issue of new shares.
     
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  4. davinx3

    davinx3 Member

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    Thanks for your answer. For question 1, if more than 75% of the shareholders (including the directors) allow this transfer by special resolution, can it be done?
     
  5. davinx3

    davinx3 Member

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    Thanks for your answer Rob, in this case, this is the issue of new shares and the only restriction is that When the company was formed it was expressly agreed that shareholders would not be able to sell their shares to persons other than existing shareholders.

    For question 1, if more than 75% of the shareholders (including the directors) allow this transfer by special resolution, can it be done?
     
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