Share transfers—corporate joint ventures
Share transfers—corporate joint ventures

The following Corporate guidance note provides comprehensive and up to date legal information covering:

  • Share transfers—corporate joint ventures
  • Restrictions on transfer
  • Prohibitions on transfer
  • Prohibitions on transfer of part of a shareholder's interest
  • Permitted transfers
  • Pre-emption rights
  • Identification of third party purchaser
  • Valuation of shares
  • Pre-emption procedures
  • Location of pre-emption provisions
  • more

When deciding to enter into a joint venture, parties will want to consider carefully the identity of the other proposed parties to the joint venture and the experience and resources that they will bring to the joint venture. They are therefore likely to want to ensure that the parties remain involved in the joint venture (at least for a pre-agreed period of time) and have some controls over who they transfer their shares to. The types of share transfer restrictions that are included will additionally depend upon (among other things) the intended duration of the joint venture, how the parties intend to realise their investments, the cash-flow and fund raising requirements of the parties and any share transfer restrictions contained in other transaction documents, eg financing documents.

Restrictions on transfer

For this reason, most joint venture agreements (JVA) and/or articles of association will contain a number of restrictions on the transfer of shares by the joint venture parties. These restrictions could include:

  1. permanent or temporary prohibitions on transfers of shares

  2. a prohibition on transfers of shares to competitors

  3. a prohibition on any shareholder transferring part of its interest

  4. conditions which must be complied with before intra-group transfers or transfers to family members or a family trust can be effected

  5. pre-emption rights (or rights of first refusal) which may