How to Transfer Shares in a Family Business

Written by ehow legal editor
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Transferring business shares within a family ensures the long-term survival and success of a business. It not only offers a legal way to pass on a business to your heirs, it also serves as a strategic way to prevent family feuds and ease the succession process. Follow these steps to effectively transfer shares in the family business.

Skill level:
Moderately Challenging

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  1. 1

    Start with a defined plan of action. Gather information from your friends and acquaintances that have transferred shares. Discuss with your family members how such a transfer can help shape their lives and preserve the company.

  2. 2

    Discuss the business terms and conditions with the members who will receive the shares. Decide whether you want the family members to participate in the business's operation or be silent partners.

  3. 3

    Devise a shareholder plan with equity shares to be divided among the persons who are likely to prove most effective in the growth of the company. Leave suitable assets and possessions to the family members who will participate in running the family business.

  4. 4

    Chalk out a business continuation plan that outlines guidelines in the event a family member wants to leave the company, buy additional shares or sell some shares to other members of the family.

  5. 5

    Use the services of legal advisers for the actual act of transferring the shares. Include important policies, future goals and aspiring plans in the legal document. Select a future head of the company with innovative ideas who can steer the company in a forward direction in case something happens to the current owner.

Tips and warnings

  • Use legal help to secure all documents to avoid future problems.

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