When transferring ownership of shares issued by a Limited Liability Company (PT), the transaction does not stop when the Sales and Purchase Agreement is signed. Learn more about the completion of transfer of shares, and when does the ownership of shares is deemed to have been transferred to the new shareholder.
In transferring the rights of shares, it requires a unique process of transaction, because parties involved in the transaction are not only buyer and seller of shares, but also the limited liability company itself as the issuer. In addition, there are some requirements listed on Article 57 Paragraph 1 Law No. 40 of 2007 concerning Limited Liability Company (“Company Law”) that must be completed by shareholders prior to shares transaction, such as:
- The obligation for the selling shareholder to firstly offer the shares they intend to sell to the other shareholders with a certain classification or to other shareholders;
- The obligation to obtain prior approval from the company organs; and/or
- The obligation to obtain prior approval from the governing authorities pursuant to the prevailing laws and regulations.
If the 3 (three) requirements are completed; the next step is to legalize the transfer of shares. Pursuant to Article 56 Paragraph 1 of Company Law regulates a transfer of shares must be conducted by way of executing a deed of share transfer, and its copy must be delivered to the Company in writing. After the parties have signed the deed of share transfer, there are some steps that must be done by the seller, which are:
- The deeds of share transfer or its copy shall be submitted to the Company in writing;
- The Board of Directors (“BOD”) must register the transfer of rights over shares, including the date of the transfer in the shareholders’ register or the special register at the Company;
- The BOD must notify the Minister about the change in the composition of shareholders not later than 30 (thirty) days after the deed signed;
- In the event that the notification was not made, the Minister must reject the application for approval or notification based on the compositions and names of shareholders of which the Minister has not been notified.
WHEN DID THE OWNERSHIP RIGHTS OVER SHARES LEGALLY TRANSFERRED?
Although both buyer and seller have signed the deed of share transfer, the ownership rights over the shares sold will not transfer to the buyer automatically. The ownership rights over the shares will shift to the buyer after the delivery of the shares takes place. As stated in article 612 of Indonesian Civil Code, “The delivery of movable properties, with the exception of intangibles, shall take place by a single handover which is carried out by the owner or on his behalf, or by the delivery of the keys of the building in which the properties are located. Delivery shall not be required in the event that the individual entitled to the properties already has such in his possession by virtue of another title.”
Because share is included in registered debts and other tangible properties, based on the above provision, therefore, its sale and purchase:
- Must be done with authentic or privately made deed;
- Based on the deed, the property rights over shares transferred to the buyer.
Hence, the moment when the seller delivered share certificates to the buyer, the ownership rights transferred to the buyer.
After the share certificates received by the buyer, he must submit the certificate to the company so that the title over the certificates could be transferred. The buyer also has to submit the copy of the deed of share to the BOD to be recorded in the shareholders’ register.
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