Private companies are setups that are privately owned and are not traded on a public exchange. They are also not compelled to meet filing requirements imposed by regulatory agencies. But while share transfer in a private company is restricted, it can be done when specific conditions are fulfilled. These conditions stem from the perception of private companies as closed groups, open to a few individuals. Thus, a shareholder is mandated by the company’s Articles of Association to provide written notice of an intention to transfer shares. The shares are then priced by the auditor of the company or the board of directors based on their book value. If no member offers to purchase these shares within a stated period, the holder may offer them to an outsider. However, directors may refuse to recognize a transfer in accordance with conditions in the Articles of Association.

Following the transfer of shares to an outsider, relevant documents bearing the details of the transferee must be submitted. This must be completed within an allotted time. Transfers are executed in line with the provisions in a company’s AoA and the company may not be bound by agreements it does not cover.