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Purchase of shares in a pvt company

anita (trainee) (514 Points)

15 January 2020

In a private company can one shareholder sell his shares to another share holder at any mutually decided price or it has to be at the book value of the shares?

Does the private company have any role in this transaction ?

Will the answer change if the purchasing shareholder is the director of the company?

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3 Replies

Anjali lakra (473 Points)
Replied 15 January 2020

Check article for transfer of shares in the AOA of the Company

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pritesh jain (155 Points)
Replied 16 January 2020

Market or fair value should be the transfer amount further article restricts the transfer of share to outsider

Chirag (Professional) (1979 Points)
Replied 16 January 2020

Absolutely ( Unless otherwise any restriction in AOA), In a private company Existing shareholders have right of pre-emption and it will always be offered to existing shareholder(s) by selling shareholder ( Generally Selling shareholder will shows his intention to Board and The Price will be determined by CA & if accepted board will intimate to existing shareholders about Price & quantum of shares available to acquire, if no-one is interested within the time stipulated then selling shareholder is free it to offer to outsider, once board took a note of no quotes received or received at lesser price)

As per your second query, In pvt companies directors are also shareholder, so in a capacity of shareholder they can acquire shares, If there is a director who is not a shareholder, then as an extended compliance you can call EGM and get approval, if it's new allotment to director then will fall as pvt placement (u/s42), so already shareholders approval will be required .

Disclaimer - For educational purpose only ..

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