Shareholder Rights Lawyer - What to do if your shareholder rights are infringed?

The transfer of shares is one of the most common legal operations in the life of a limited liability company. It may arise when a shareholder wishes to exit the company, when a new investor comes in, when control over the company is sold, or when the shareholders wish to reorganise the ownership structure.

At first sight, the procedure seems straightforward: a contract is signed, the articles of association are updated and the documents are filed with the Trade Register. In practice, matters can be far more complex. A transfer may involve negotiations between shareholders, tax checks, hidden debts, guarantees, pre-emption rights, clauses in the articles of association, litigation and risks for the seller or the buyer.

This is why the assistance of a share transfer lawyer is important before any documents are signed. The lawyer reviews the company's records, identifies the risks, drafts the transfer agreement, prepares the shareholders' resolutions, updates the articles of association and ensures that the operation is correctly registered.

At Buju, Stanciu & Associates, we advise on corporate operations, share transfers, shareholding restructurings, disputes between shareholders and transactions involving companies in modern sectors. Our experience covers corporate law, technology, fintech, blockchain and crypto.

What does a transfer of shares mean?

Shares represent the shareholder's participation in the company's share capital. They reflect the shareholder's rights and obligations: the right to dividends, the right to vote, the right to take part in the company's decisions and, within certain limits, liability towards the company.

A transfer may be total or partial. A shareholder may transfer all the shares and exit the company entirely, or transfer only part of them and remain a shareholder.

When is a transfer of shares used?

A transfer may be used in a number of situations. The most common are:

• The exit of a shareholder from the company
• The entry of a new investor
• The sale of a company through the transfer of its shares
• The reorganisation of the shareholding structure
• The separation of shareholders in conflict
• The transfer of shares between family members
• Preparation for a merger or acquisition
• Bringing in a strategic partner
• The transfer of a holding in a startup or tech project

In each case, the analysis must be tailored. A transfer between two existing shareholders is simpler than one to an outside investor who wishes to review the company's position before paying the price.

Transfer between shareholders vs. transfer to a third party

The two scenarios carry different rules and risks:

In an SRL, the relationship between shareholders matters a great deal: a new shareholder may influence decisions, strategy, the distribution of dividends and the future of the company. And when the relationship between shareholders deteriorates, it is useful to know in good time what you can do if your rights as a shareholder are infringed.

The stages of a share transfer

1. Review of the articles of association. They may contain special rules on transfers, the majorities required, shareholders' rights or the conditions for a new shareholder to join. If these rules are not observed, the transfer may give rise to disputes or may be rejected at registration.
2. Review of the company's legal and tax position. Debts, litigation, key contracts, tax liabilities, employees, assets, loans, guarantees, licences and authorisations. For the buyer, this stage is essential - they are not simply buying shares, they are joining a company together with its obligations.
3. Negotiation of the terms. What is being transferred, at what price and on what terms. The price may be paid in full, in instalments or conditioned on results; guarantees, indemnity clauses, non-compete obligations or conditions precedent may be included.
4. Drafting the transfer agreement. The parties' details, identification of the company, the number of shares transferred, their nominal value, the price, the payment method, the representations, the warranties, liability and the transfer deadline. A superficial contract can quickly end up in court.
5. The shareholders' resolution. The assignment is approved by a resolution of the general meeting of shareholders (AGA) or by a decision of the sole shareholder, setting out precisely who leaves, who joins, how many shares are transferred and how the capital structure changes.
6. Updating the articles of association. With the details of the new shareholders and the new shareholding structure; if the director, the registered office or the object of activity also change, these must be recorded correctly.
7. Registration with the Trade Register. The documents are filed with the Trade Register (ONRC) in order to register the entry. If the file is incomplete or contains inconsistencies, the application may be adjourned or rejected.

Documents required for the assignment of shares

The documents vary depending on the situation, but in practice the following are frequently required:

• The share assignment agreement
• The resolution of the general meeting of shareholders or the decision of the sole shareholder
• The updated articles of association
• The application for registration with the Trade Register
• The identity documents of the parties
• Statements from the incoming shareholder, where required
• Proof of payment of the applicable fees
• A power of attorney granted to the lawyer, if the file is submitted through a lawyer
• Tax documents or evidence required depending on the company's situation

If the assignee is a legal entity, its own corporate documents may also be required, together with internal resolutions, certificates of findings or documents concerning the legal representative.

Common risks in an assignment of shares

An assignment may look like a mere formality, but it can conceal serious risks:

• Non-payment of the assignment price
• Hidden tax liabilities
• Undisclosed litigation
• Personal guarantees left with the departing shareholder
• Disadvantageous commercial contracts
• Breach of pre-emption rights
• Lack of shareholder approval
• Articles of association not correctly updated
• Problems at the Trade Register
• Disputes between the former and the new shareholders
• Liability for false or incomplete statements

These risks can be reduced through a legal review carried out before signing.

The shareholder's liability after the assignment

A frequent question is whether a shareholder who assigns his shares remains liable after leaving the company. In principle, following the assignment, the shareholder no longer holds the rights and obligations attached to the capacity of shareholder. Nevertheless, there may be separate obligations that continue to affect him.

For example, if he has personally guaranteed a loan taken out by the company, the mere assignment of the shares does not release the guarantee. If he has signed contracts in his own name or has made false statements in the assignment agreement, he may be held liable afterwards. For this reason, the departing shareholder must review not only the assignment itself, but also all related obligations: guarantees, loans, contracts, directorship mandates and debts owed to the company or to the other shareholders.

Due diligence before purchasing shares

For the buyer, an assignment should be treated as an investment. Before signing, legal and tax due diligence is recommended: a review of the company's documents, contracts, debts, litigation, tax obligations, employees and assets.

If the company holds significant assets - real estate, equipment, software, licences, trade marks or client portfolios - these must be reviewed separately. A prudent investor does not rely solely on the seller's statements: he requests documents, verifies the legal position and asks for contractual warranties.

Assignment of shares in start-ups, IT and crypto

In technology, fintech, blockchain and crypto, an assignment can raise additional issues. Many companies hold not only conventional assets, but also rights over source code, digital platforms, applications, databases, software licences, tokens, digital wallets or contracts with users and investors. In such cases, the review must also cover:

• Intellectual property rights
• Who owns the source code
• Contracts with the developers
• Software licences
• The platform's terms and conditions
• The digital assets held by the company
• Regulatory risks
• Obligations towards investors
• The financial flows and the accounts used

At Buju, Stanciu & Associates, our experience in corporate law, technology, fintech and crypto allows us to assess these transactions not only formally, but also in practical terms. In a digital project, the value of the company may lie in assets that are difficult to grasp without legal and technical expertise.

Assignment of shares vs. merger or sale of assets

The assignment of shares is not the only way of transferring a business. Sometimes, a sale of assets, a merger between companies, a share capital increase or an internal reorganisation may be more appropriate.

The distinction matters. Through an assignment of shares, the buyer takes over a holding in an existing company, together with its history, contracts, debts and risks. Through a sale of assets, only certain assets or contracts can be transferred. Through a merger, the companies' assets and liabilities are combined into a new or absorbing structure. The choice depends on the parties' objectives, the tax risks, the company's debts, the control structure and the costs of the transaction.

The role of a lawyer in the assignment of shares

A lawyer handling an assignment of shares plays an essential role at every stage: reviewing the articles of association, analysing the risks, drafting the assignment agreement, preparing the shareholders' resolution, updating the articles of association and managing the registration with the Trade Register.

In complex transactions, the lawyer also takes part in negotiating the price, setting the guarantees, drafting the liability clauses and protecting the client against hidden debts. For the transferor, the aim is a clean exit from the company and a limitation of any subsequent liability. For the transferee, it means verifying what is being bought and what risks come with it.

Why Buju, Stanciu & Associates?

We provide legal assistance for share transfers, mergers, acquisitions, shareholding restructurings, disputes between shareholders and commercial litigation. Our approach is practical and geared towards preventing problems.

We do not treat a share transfer as a mere filing of documents, but as a transaction capable of affecting the control, the assets and the future of a company. We work with businesses in traditional sectors, as well as with companies in IT, fintech, blockchain and crypto, where the analysis must also cover digital assets, intellectual property and regulatory risks.

The first step is a short discussion about your particular situation and about what you want to achieve from the transaction.

Conclusion

The transfer of shares is a significant operation, one that can change the control of a company and produce substantial legal, tax and commercial effects. Although it may look like an administrative procedure, it in fact calls for careful analysis and properly drafted documents. A lawyer specialising in share transfers helps you avoid mistakes, understand the risks involved and protect your interests, whether you are selling or buying shares.

Frequently asked questions