Structuring An Exit From Investment

Shareholders' excitement over a new joint venture can be overshadowed when issues concerning the available options for exit from the investment arise for discussion. It is prudent for shareholders to address the full spectrum of their investment as early as possible, including the start-up stage and the operation of and exit from the investment. Company law and practice provide tools to create the boundaries necessary to protect shareholders' business relationships from third parties and each other.

Pre-emption clauses

Pre-emption clauses place valid restrictions on shareholders' freedom to transfer shares in a private company. The model articles in Table A of the Companies Law (Cap 113) contain standard restrictions on the transfer of shares, pursuant to which all existing company shareholders have the right to be offered shares which one shareholder intends to transfer to another. Also known as rights of first refusal, pre-emption rights are attached to shares