The Company Sale Where the Notary Must Verify the Transfer of Shares
A Belgian BV (private limited company) has three shareholders: founder An, investor BVBA Invest, and employee Tom. An wants to sell her 40% stake to Invest for 600,000 EUR. The articles contain a pre-emption clause requiring the shares first to be offered to the other shareholders at the price offered by a third party. Tom claims he can buy at the same price. Invest argues the clause only applies to sales to outsiders, not to existing shareholders. The notary is asked to draft the share transfer deed and to certify the transfer. The company's financial year ends in December; the transfer is planned for March.
1. Does the pre-emption clause apply to the sale from An to Invest, and how should the notary proceed?
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The notary must read the pre-emption clause literally. If it grants a right of first refusal to 'the other shareholders' on any transfer, it applies to a sale to an existing shareholder as well, unless the clause expressly excludes transfers between shareholders. The notary should not rely on Invest's interpretation. The notary must verify the articles, any shareholder agreement, and whether Tom's right was validly triggered and exercised within the stated period. If Tom validly exercises the right at the same price, the sale to Invest cannot proceed without Tom's waiver. The notary should obtain a written waiver or evidence that the procedure was followed, and only then draft the deed. The notary's role is to certify the legal validity of the transfer, not to arbitrate commercial disputes.
2. What formalities and checks must the notary complete before certifying the transfer in March?
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The notary must verify An's title to the shares, the absence of pledges or attachments, and that the shares are fully paid. The notary must check the BV's articles for any approval requirement, the share register, and whether the transfer triggers a mandatory offer or tag-along. The deed must identify the parties, the shares, the price, and the representations. The notary must also consider the tax aspects: the transfer of shares is in principle exempt from VAT, but registration duties may apply depending on the deed's form, and the notary should confirm the applicable rate. The notary must ensure the company's share register is updated and the transfer is notified. The March timing matters for the annual accounts and any dividend entitlement; the notary should specify the effective date and check for pre-closing distributions.