Tuesday, February 9, 2010

Selling Shares in a Limited Liability Company

Shareholders owning shares in a limited liability company (LLC) may seek to sell or transfer the shares at some point during the life of the company. In such a case, there are specific legal requirements in the Commercial Companies Law of Oman pertaining to such a sale or transfer.

Specifically, the shareholder wishing to sell his shares first must give notice of his intention to the manager(s) of the LLC and the other shareholders in the LLC. Each shareholder in an LLC has a right of first refusal, meaning a right to purchase the shares on the same terms, but before they are offered to a non-member of the company.

The non-selling members of the LLC may choose to purchase the offered shares before allowing those shares to be sold to an outsider. Issues may arise in cases where more than one shareholder is interested in purchasing the shares that are being offered. In such a case, the shares will be allocated between the members seeking to purchase such shares according to their proportional ownership in the LLC.

The specific procedures for selling the shares in an LLC are outlined as follows:

  • The seller of the shares must give written notice to the manager of the LLC of his intent to sell. The notice must specify the number of shares, the name, nationality and address of the proposed purchaser, and the terms of the sale.

  • The manager must acknowledge receipt of the notice and send a copy of the notice to each shareholder in the LLC. The manager must also notify the shareholders of their rights to purchase the shares according to the terms in the notice.

  • If the shareholders wish to purchase the shares, they must give notice to the manager of the LLC and deposit the full amount of the purchase price within 45 days of the receipt of the notice by the manager.