Shareholders agreements

If a company is offering shares to outsiders, it first has to offer to existing shareholders. - Existing shareholders get right of first offer. IF say a shareholder wants to exit (generally in case of private company), he first has to offer shares to existing shareholders. Only if they refuse, the shareholder can offer his shares to outsider. The existing shareholders have a right of first refusal.

CA Suraj Lakhotia

Admin

07-Sep-20 19:07

Sir, please correct me if I'm wrong... Right of first offer -- if a shareholder wants to sell his holding he should first offer it to existing shareholders who is having a right of first offer before selling it to outsiders. Right of first refusal -- if a shareholder wants to sell his holding and invites offers from outsiders through share broker and he gets an offer from outsider first of all he should approach the share holders having the right of first refusal and ask whether they wanted to accept it/reject it at the same bidding price quoted by outsider. Sir, suggest me if there are any corrections because I'm reading this topic under transferability of shares(features of company) and not regarding public issue of shares.

Thread Starter

VIJAYA SARADHI MAGANTI

CA Inter

★ 850

07-Sep-20 20:54

Your understanding is correct

Sriram Somayajula

Admin

07-Sep-20 21:02

Thank you sir!!!

Thread Starter

VIJAYA SARADHI MAGANTI

CA Inter

★ 850

07-Sep-20 21:03