VIC Can Company Directors Proceed with Issuing Shares?

[davinx3]

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.

 

[Rod]

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.

 

[Rob Legat - SBPL]

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.

 

[davinx3]

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.

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?

 

[davinx3]

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.

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?