Status / Existing Scenario : I own 50% equity shares of a Pvt Ltd Company. I am also the director of the company. There are 2 more shareholders and directors in the company. I want to decrease my shares % because of the fact that I do not wish to take so much stress and responsibilities in the company due to my health issues and other personal work. My question is, if I want to decrease / give away / surrender some of my my shares in the company, what can I do? Note : - there is no fraudulent or breach by anyone within the company of any kind, and the company is in losses. - The Article of Association of the company allows share transfers as well as buy-back of shares.
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Shareholder can renounce the shares in favour of any other person, who may not be member or director of the Company.
Shareholder will give a letter of renunciation in favour of renounce to Company
. 3. File e-form MGT-14 with ROC; within 30 days from the date of passing of Resolution.
OK. But what if no one is ready to take the shares?
If there is no buyer for shares go in for winding up of the company
You can proceed to sell your shares in the company as per the guidelines found in the AOA or MOA of the company.
If you decide to sell your shares, you and the company must then agree a price. Sometimes a mechanism is set out in the company’s Articles. If so, this usually involves a price being determined by the company’s accountant or an independent accountant if it cannot be agreed between you and the company.
Only the restrictions found in the Articles are legally binding. Any private arrangement between the shareholders is not binding on the company or the shareholders either. Therefore, only the Articles of Association can limit the transfer of shares. The right to transfer shares in a private limited company cannot be a full restriction on or prohibition of the transferability of shares.
If any of the current shareholders are coming forward to purchase shares, they must be allocated these shares. When no existing shareholder is interested in, or excess shares are available, the same could be transferred to the external partner.
As it is a private company, where shares are closely held, you can sell your shares only to other share-holders and not to any outsider. Buyback requires board approval.
You can give away your share to other directors or shareholders for a price
Dear client,
In case no one is ready to take the shares, then you cannot do anything to change that. You can try and sell the shares at a reduced price if need be, or wait and see if anyone wants to take them.
Thank you.
