Purchase And Sales Of Shares

Purchase And Sales Of Shares

Keen to grow your money by buying stock in a private company? Perhaps, you want to sell your shares and invest your money elsewhere? Be sure to protect your interests with good legal guidance.

Buying shares in a private company can be lucrative, but it is a complicated endeavor. Without a water-tight agreement and proper risk assessment, the potential for disputes and losses is high. To protect your interests, you need the expertise of a business lawyer with experience in the purchase and sale of private company stock.
The reason why buying shares in a privately held company is a potential minefield for investors is the disadvantage of not being able to determine the health of the business before buying stock.
Unlike public companies that must regularly publish their accounts on top of other public disclosures, private companies are not obliged by law to share any information about their business.
Without much publicly available information to guide your investment decision, there is a risk you may buy into a business that isn’t as viable as you thought. This why you need the guidance of a lawyer when completing the stock purchase.

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    Why You Need A Lawyer When Buying And Selling Shares

    While private companies are subject to securities laws administered by the Ontario Securities Commission, they can take advantage of several exemptions to freely trade their shares. And therein lies the potential exposure for investors, for which you need qualified legal advice, whether you are buying or selling stock.

    Shares in private companies are treated as private assets over which owners can choose who they can sell to as long as they meet the conditions set in the Articles of Association. As such, your dealings when buying shares will benefit from the guidance of an experienced securities lawyer.

    A securities lawyer has the job of ensuring that your share agreement and related documents have enough protections in case of disagreements over profit sharing, transfer of shares, and decisions on the general direction of the business.

    If you hold stock in a private company that you want to dispose of, it is also a good idea to have a business lawyer look over your share agreements to advise on your best options. Hidden clauses and other fine print in the paperwork can be exploited by other shareholders to your disadvantage. 

    Where you got shares as an employee incentive, there may be restrictions that prevent you from selling your shares. A lawyer will help you explore your options. 

    Maybe you are an original investor looking to liquidate your stock in a business whose values or direction you no longer identify with. Again disagreements over the valuation of the company’s stock and assets, as well as competing interests among other shareholders can combine to drag or scuttle the sale.

    As your securities lawyers, it is our job to make sure you get the best value out of your investments and that your stock is adequately protected. Are you considering buying or selling shares and need the guidance of a lawyer?

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