6.M&A

|Q7 (Past Issuance of Share Certificates)

In due diligence, we received a question about a past share transfer and at the same time about the status of our issued share certificates. We don’t remember issuing share certificates. Is this a problem?

As a condition to an IPO or M&A, it is important to ascertain without doubt who are the shareholders of the company. In order to do so, the circumstances of past transfers are investigated. For companies issuing share certificates, delivery of the certificate is a condition to any valid transfer. If no share certificate is delivered between the parties to a transfer, the transfer is not valid, so it raises an issue as to whether the current shareholder is really a shareholder. Also, even if a share certificate-issuing company does not issue a share certificate, delivery of the certificate is required between the parties to a transfer, so you should be careful. It's important to understand that the company must follow proper procedures so that this kind of problem does not arise immediately before an IPO or M&A.

(Posted: January 27, 2012)