One of the notable points of the new law on enterprises, dated November 26, 2014 (Law on Enterprise 2014), is the relaxation of restrictions on the founding shareholders’ ordinary shares during the period of three years from the initial establishment date of the joint stock company (the Lock-up Period).
Both the old law on enterprises (Law on Enterprise 2005) and Law on Enterprise 2014 regulate that a founding shareholder may freely transfer their ordinary shares to other founding shareholders. However, within the Lock-up Period they are restricted from transferring their ordinary shares to persons not being the founding shareholder unless obtaining approval from the General Meeting of Shareholders (the GMS). Under the Law on Enterprise 2005, such transferee shall automatically become a founding shareholder whilst the Law on Enterprise 2014 has removed such regulation. As a consequence, such transferee shall not be regarded as a founding shareholder, and when re-selling those shares to others within the Lock-up Period, shall not be subject to the aforesaid restriction.
According to Article 119.4 of the Law on Enterprise 2014, all restrictions on ordinary shares of founding shareholders shall be lifted after expiry of the Lock-up Period. Such restrictions shall not apply in the following circumstances:
1.1. Additional shares which the founding shareholders have after the establishment date of the company
1.2. Shares which the founding shareholders transfer to persons not being the founding shareholders of the company
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