Introduction
The Stock Transfer and Record Existing Stock Transfer workflows permit the capturing of either a stock transfer executed inside or outside the platform. A stock transfer involves switching the owner of stock from one person/entity to another person/entity. Stock transfers generally don't involve cash.
The generative Stock Transfer workflow is intended to handle permitted transfers, which do not require compliance with any right of first refusal or co-sale rights and/or related agreements. Typically, these types of permitted transactions include transfers from an individual to their family trust or transfers from one investment fund to another affiliated fund(s). In such cases, the transfers are without payment.
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 permitted transfer guidelines above, you most likely will want to speak with your lawyer before starting a Stock Transfer workflow in the platform.
Click the links below to jump to the steps for each workflow:
Record Existing Stock Transfer
Stock Transfer Workflow
Getting Started
You’ll find the Stock Transfer workflow under the Equity section of workflows. This workflow will lead you through transferring shares from one individual/entity to another individual/entity.
To start, enter the original stockholder and select which stock certificate is to be transferred.
Designate Transferees
Click Add Transfer. Enter the name of the transferee that will be receiving the shares. Note that you can enter several transferees on this screen.
Enter Transfer Agreement Language
You will most likely want to work with your lawyer at this point in the workflow, as the platform will ask you to enter the details about the recipient(s) and agreement document.
For example, you will craft the language or terms for the Transfer Agreement document (which agreements are restricting the transfer and which agreements are being joined by the transferee). These pieces of information are placeholders below, which require your explicit input. You'll then have the ability to grant the transferees access to the documents associated with transferor's stock certificate at the Grant Document Access step.
Checkpoint
The Stock Transfer Agreement, Stock Power Agreement, and Common Stock Certificate 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
A notification is sent out to the applicable company representatives to sign documents. Once signed, all documents will be automatically added to the data room, and the stock ledger and cap table will be adjusted accordingly.
Record Existing Stock Transfer Workflow
Getting Started
You’ll find the Record Existing Stock Transfer workflow under the Equity section of workflows. This workflow will lead you through adding a stock transfer that has already happened outside of the platform. You will need to provide a Stock Transfer Agreement, and you can upload any associated Board and/or Stockholder approvals.
Upload/Pick Agreement
Click Document Options to attach the executed Stock Transfer Agreement. You can either upload the file from your computer or select it from the Data Room if it has already been uploaded. Once attached, enter in the Effective Date of the agreement.
Upload Approvals
If there are any associated Board and/or Stockholder approvers, attach those approvals either by uploading them from your computer or selecting them from the Data room. If you did not check to include these approvals at the start of the workflow you can skip this step.
Define Transfers
- Click Add Transfer.
- Select the original stockholder and the certificate to be transferred.
- Click Add Transferee.
- Enter the name of the recipient and the number of shares being transferred.
- If there are multiple recipients, click Add Transferee again, or click Continue.
- 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, or click Continue.
- If there are other stock certificates to be transferred, click Add Transfer and repeat these steps.
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 Common Stock Certificate will display for your review at the Checkpoint. There will also be an opportunity for you to send the documents for legal review. Click Continue to send the documents out for signature.
Wait for Signatures
A notification is sent out to the applicable company representatives to sign documents. 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 provides cap table management and other administrative services to private companies and their equity compensation plans.
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