Can shareholder agreements restrict share transfers?

Corporate Legal Consultancy

Yes. The Companies Act recognizes shareholder agreements and allows private-company unanimous agreements to regulate share-transfer restrictions.

Common controls

  • right of first refusal
  • pre-emption
  • lock-in periods
  • board approval
  • permitted transferees
  • founder restrictions
  • tag-along
  • drag-along

The Act also recognizes circumstances where registration of a share transfer can be refused if it conflicts with the Articles or a shareholder agreement.

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