Corporate rights sale. Change of the founder
It may happen that your company owes someone a large sum of money and the only way out of the situation is corporate rights sale. However, one can change the founders of a company not only by the sale of corporate rights, but also directly by donating the share in the share capital or as a result of withdrawal from the founders.
The sale of corporate rights is the most common way to change the founders is and this method is certainly justified. Since the rights are sold at the nominal value of the share capital, the seller receives no income and thus no taxes are to be paid. But other ways of such a transit have some nuances (see below).
Before characterizing other ways to change the founders we would like to highlight some features of corporate rights sale. If you are not the sole founder of the company but plan selling your share not to another co-founder, but to the third person, anyway, firstly, you must offer it to the co-founder. During the next month he may realize his preferential right to purchase the share. If he will not, you can sell a share to the third persons under the same conditions. Though the Statute of a company may provide even a smaller term than a month, that is why one should carefully read it before the sale of corporate rights.
Notarization of the sale contract is not required, but we recommend it in a few cases – when the founder is a foreigner, if there is a large amount of the share capital, etc. It’s rather not our recommendation, but the one of state registrar, based on their bitter experience of illegal raider fraud, particularly when the signature could be forged or afterwards founder denied the fact of sale.
Therefore, it is better in such cases not to save on state fees payment (1%) and to notarize the contract of corporate rights sale. This procedure, in its turn, will simplify the registration of founder changing at the state registrar. If you buy corporate rights of the company, possessing a considerable share of the market, you should not forget the antitrust laws. Due diligence and financial audits are the best ways to protect one from the risks (in part) before purchasing such rights.
Another detail concerning all contracts, including the corporate rights sale contract: if the sum of the contract is more than 150 thousand UAH, it may be paid only via bank transfer.
In the case of donation of corporate rights should remember that a done gets a profit and is to pay the tax. Therefore, we do not consider this variant as the main way to change the founders.
Exit from the participants (founders) is complicated because of the imperfection of legal regulation under the laws of Ukraine. In practice very often one faces problems with the correct filling the withdrawal application, by setting the date of withdrawal, payment sum of money to a member proportional to his share in the share capital. Thus we do not consider withdrawal to be an ideal way of changing the founder.
AL “Bachynskyy, Kolomiets and partners” provides a full range of services in support of corporate rights sale and founders changing, including: legal consulting, preparation and submission of all documents required by the state registrar, etc. If you have questions, please call: + 01 38096002 00; 032 247 35 44.