Introduction
The Record Existing Secondary Sale upload workflow permits the capturing of a secondary sale. A secondary sale is the sale of shares from one stockholder to a third party (or third parties), which is not in connection to a company's acquisition. Alternatively, a stock transfer involves switching the owner of stock from one person/entity to another person/entity. In other words, secondary sales involve cash, and transfers don't.
Please note that there can be tax consequences to a transfer of shares, so if you're uncertain whether or not your transaction meets the stock transfer or secondary sale guidelines, you may want to speak with your lawyer before starting a Secondary Sale workflow in the platform.
Running the workflow
Getting Started
You’ll find the Record Existing Secondary Sale workflow under the Equity section of workflows. Secondary sales will always happen as an upload version of the workflow because they will occur outside of the platform, and you will already have signed documents in hand.
Check the boxes if the Board and/or Stockholders approved the secondary sale. Checking these boxes will prompt you to upload the approvals during a later step in the workflow.
Record existing Secondary Sale
- Upload the Secondary Sale Agreement and select the effective date of the sale.
- Upload the Board Approval and/or Stockholder Approval, if applicable. If you did not check that the sale had been approved by the Board or Stockholders, this step will not display.
- Define the transfer(s), by clicking Add Transfer. Enter the name of the person who has transferred shares and select the stock certificate associated with the sale.
- Click Add Transferee. Enter the name of the Transferee, the number of shares they have received, and the total amount paid. Please note that you can add multiple transferees during this step.
- This step displays the documents associated with the transferor's stock certificate and are accessible to the transferee. Click Pick Existing Documents to add any additional documents from your Data Room.
- If there are any additional sales, click Add Transfer and repeat the previous steps. Otherwise click Continue.
Stock Certificates
Click Create Certificate. Select to either upload previously generated stock certificates, or to use the platform to generate new stock certificates for the transfer. Confirm the certificate number, issuance basis, issuance date, and add all necessary restrictive legends.
Checkpoint
The Stock Transfer Agreement and Stock Certificate(s) will be generated, which you can review at the Checkpoint. There will also be an opportunity for you to send the documents for legal review.
Signature Process
If you've used the generative path for the stock certificate, the company representative(s) will sign the certificate. Once signed, all documents will be automatically added to the Data Room, and the Stock Ledger and Cap Table will be adjusted accordingly.
Additional Resources
Screenshots are for illustrative purposes only.
Fidelity Private Shares LLC provides cap table management and other administrative services to private companies and their equity compensation plans.
Fidelity Private Shares LLC
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