Selling Shares in a Private Company
Medium and large private companies who do not intend to go public, need to have a system in place for employees and investors to cash out on their private company stock and transfer shares to designated beneficiaries.
Typically the company provides a redemption policy setting a number of dates in the calendar year, which facilitates share owners selling shares in a private company at the current valuation price.
Depending on the company’s share transfer policy, the shareholder may also be allowed to transfer their shares to designated beneficiaries who can then have those shares redeemed at a later point in time.
Having an online solution to facilitate selling shares in a Private Company is key to providing liquidity in a restricted security.
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Private Company Stock
With the Global Shares private company stock trading solution, companies can provide a transparent and efficient ‘cash out’ mechanism for selling shares in a private company for their shareholders.
Global Shares software manages all aspects of private company stock with its unrivalled range of private company stock modules.
Shareowners in private companies can sometimes be left in the dark when compared with their public counterparts. The same level of info and capabilities are not available when it comes to transacting on their privately held shares.
Global Shares private company stock market software helps to overcome this barrier, giving transactions which were typically done via fax or email an online and automated structure with all rules and restrictions clearly set out for the share owner.
Restrictions on Selling Shares in a Private Company
Most private companies apply some form of share restriction to shareholders to ensure that a particular level of shareholding is maintained at all times.
The Global Shares Share Restrictions module allows a company to apply share retention dates, minimum shareholding rules and share collateralization all the way down to the certificate level. These share restrictions can be informational only or can restrict the sale and transfer of shares. They are all made visible to the shareholder on their EquityGateway with explanations for each restriction in the form of a tool-tip.
The flexibility and detail behind this module is key for any private company managing their internal market. Once set up, there is no need to worry about participants breaking restriction rules since everything is all applied automatically through the system.
Sale Windows for Private Company Stock
Trading windows can be applied as required by private companies to offer a period in which private company stock can be redeemed by the employing company. These can be applied for online redemption, transfer and gifting to non-profits.
Private Company Stockholders have a clear picture of what windows are applicable to them (different windows may be applied to groups of shareholders) with this information being made available to them online with innovative tools such as traffic light systems and countdown clocks highlighting if they can sell their private company stock and what time they have left to do so.
Managing multiple classes of Private Company Stock
Some classes of stock are redeemable while others are not.
Global Shares solution allows you to turn on a private company stock market trading facility for certain securities and turn it off for others, so that common shareholders can transact their private company stock, while preferred convertible shareholders may have to wait until their shares have been converted to common stock.
Bank Details collection & validation for Selling Private Stock
Global Shares online services collect bank details for participants selling their shares in a private company or who are receiving cash dividends on their private company stock. Participants can receive the proceeds into their bank accounts in the currency of their choice.
Global Shares systems ensure that correct bank account details are received through a series of bank validation processes, which means that the payment is applied as soon as validation is successful.
Global Shares can also process the actual payment, if the company does not want to handle this internally, and can provide a range of payment methods and currency alternatives for distributions related to the sale of private company stock.
Beneficiary linkage for Private Stock Sale and Transfer
Private Companies often want to control who their stockholders can transfer or sell their private company stock to.
Simple tasks such as ‘request a new beneficiary’ facilitate this control. Similarly, administrators on the system can easily edit and monitor lists, which monitor who shareholders can transfer or sell to.