Private company share sales may include a provision relating to a possible future sale of those shares to a third-party within a predetermined period. In that event, the original shareholder may receive a proportion of any enhanced price
It is not uncommon for private company share sales between shareholders to include a provision such that if in the future there is an outright sale of the company’s shares to a third party at an enhanced price during a predetermined period the exiting shareholder will be compensated with a proportion of the enhanced price received by the remaining shareholders.
We wondered whether readers thought it was possible for such a provision to be built into the buyback agreement of a purchase of own shares from a retiring shareholder-director which would otherwise qualify for “capital treatment” under condition A of CTA 2010 s 1033.
Alternatively would the provision be regarded as proceeds in the form of a “contingent right” which not being cash could jeopardise “capital treatment”?
If readers consider “capital treatment” would not be jeopardised we wondered whether any additional...