5.12 PRE-EMPTIVE RIGHTS AND TRANSFERABILITY OF SHARES
These clauses can be put into a shareholder’s agreement which each shareholder must agree to and sign. In a smaller company, it is probably better to just put it into the MOI and then one does not need to get agreement from future shareholders. Can one put this into the rules?
1. Notwithstanding anything to the contrary contained in this MOI, a shareholder “offeror shareholders” shall not be entitled to sell, alienate or in any other manner dispose of or transfer any security in the company unless all the securities are beneficially owned by that shareholder and that those securities have first been offered “the offer” in writing to the other shareholders “offeree shareholders” in the company who have 30 days after receipt to accept this offer.
2. The offer shall not be subject to any other term or condition except that the whole and not a part of the offer must be accepted. If offers to purchase are accepted by the offeree shareholders for a greater number of shares than those offered for sale, the shares shall be divided amongst the offeree shareholders in the proportions as nearly as possible in which they already hold shares in the company, provided that no offeree shareholder shall be obliged to acquire more shares than he shall have offered to purchase.
3. Should the offeree shareholders not accept the whole of the offer, then the offeror shareholders shall be entitled, within the thirty days after such non-acceptance, to obtain a written offer from a bona fide third party to purchase all of the securities, but at not less than the price at and on conditions which are more favorable than those at which the offeree shareholders were entitled to purchase the shares in terms of 1.
4. Should the offeror shareholder obtain an offer from a bona fide third party in terms of 3, then the offeror shareholders shall furnish the offeree shareholder a copy of that offer showing the name and address of the bona fide third party and all the terms and conditions of that offer; and the offeree shareholders shall, within fourteen days after the receipt of the third party offer, be entitled, but shall not be obliged, to purchase the shares on the same terms and conditions as set out in that offer.
5. Should the offeree shareholders not purchase the shares within the fourteen days referred to in 4 then the offeror shareholder will be entitled, within seven days after the expiry of those fourteen days, to sell and transfer all (but not a part only) of the shares to the bona fide third party on the same terms and conditions as set out in the written offer referred to in 3.
6. Any provision condition or restriction in these clauses 1-10 may be waived if all the shareholders consent in writing thereto.
7. Should any transactions be effected by the offeror shareholder in terms of this MOI, the directors shall be obliged to register the transfer of the shares in question unless they have not been satisfied in such manner as they may reasonably require -that the sale and/or transfer of those shares is bona fide and conforms to the requirements of those special requirements; or they have good grounds (which shall be given) for stating that the admission of the proposed transferee is not in the interests of the company.
8. Should the offeror shareholder not sell all the shares in question in terms of this article, then all the provisions of these clauses 1-10 shall again apply, with the necessary modifications, should the offeror shareholder still wish to sell any share in the company.
9. Subject to provisions of this clauses 1-10, the directors may, in their absolute discretion and without assigning any reason, decline to register any transfer of any shares to a person of whom they do not approve.
10. If the directors refuse to register a transfer they shall send notice of that refusal to the transferee within ten days after the date which the transfer form was lodged with the company.
The above is quite complex and could part of the rules. It could be just as good to insert the clause:
All share transfers must be approved by the board of directors and all share transfers must be approved by way of special resolution.