Transferring shares from one shareholder to another involves a series of documents and confirmations. The article below sets out the major considerations and how to complete a share transfer using Founded. 

Restrictions on Transferring Shares

Before you transfer shares, be sure to review your corporation's Articles of Incorporation, corporate By-laws and Shareholder Agreement (if any) to ensure that the proposed share transfer is permitted.

Tax Implications

There can be complicated tax implications on a shareholder resulting from the transfer of shares. 

Tax implications can include capital gains if a shareholder sells their shares for more than the original purchase price or, conversely, capital losses if a shareholder sells their shares for less than the original purchase price.

It is highly recommended that you speak with an accountant prior to transferring shares, so the shareholder can determine the most tax efficient way to transfer shares. 

How to Transfer Shares on Founded

Login to your Founded account and click 'SHARES' -> 'Transfers'. From this screen, you'll be able to initiate the process of transferring shares. 



After clicking 'Transfer Shares', the following panel will appear:

Here you will identify the number and class of shares to be transferred. A shareholder can transfer all or a portion of the shares they own. 

Total Amount Paid

Once the number and class of shares are identified, a price needs to be set for the total transfer of shares. Keep in mind the total amount paid is different from the price per share. The total amount is the gross aggregate payment for all shares that are being transferred. 

Closing Date

The Closing Date of the share transfer is the date the share transfer transaction will be completed. 

Restrictions on Who Shares Can Be Transferred to

Whenever shares are transferred, they must be done in accordance with laws that restrict who can acquire shares in the company. To learn who shares can be transferred to, review our article on the Private Issuer Exemption here

Documents

When transferring shares on Founded, there are three documents that are automatically created:

  1. Share Transfer Agreement 
  2. Resolution Approving Share Transfer
  3. Notice of Share Transfer

Also, the share register for your corporation will be updated once all the documents have been signed. 

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