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?