Exit Strategies: Registering A Share Transfer When Target Shares Are Encumbered By Third Parties

The stock market's flexibility is its greatest selling point for publicly traded companies, as it allows a fast flow of capital while still enabling majority shareholders to implement fundamental corporate changes should they wish to exit the market.

However, even with all of this flexibility, shares may not always be free of other encumbrances, defences or liens, and the sale of such shares may be opposed by the interested parties or even refused to be recognised as a genuine sale by the Trade Registry. This is especially troublesome when shareholders aim to regain full ownership of the company.

So how can a majority shareholder exit the stock market when dealing with encumbered minority stock? Would a squeeze-out procedure succeed, or will it be deemed to defraud secured creditors? Most importantly, how may a majority shareholder regain full ownership over its company once again?