How can you transfer stock between directors of a corporation?

By Nina Kaufman, Esq.

Q.:  In a privately held company, is it necessary for a stock transfer between two directors to be approved by the shareholders?

A.:  Under most state laws, shareholders have the right to approve (or disapprove) any transferring ownership is involved, including a stock transfer.  If the company has multiple classes of stock, the shareholders’ agreement may specify that only the owners of certain classes of will vote on that particular issue – in other words, that particular kind of stock transfer is not an issue open to all shareholders, only some.

To answer your specific situation, speak to an attorney in your state to review the different classes of stock, voting rights, and corporate bylaws, all of which will have a bearing on the best way to document the stock transfer.

Want to learn more about Kaufman Business Law? This is the video to watch.