Hwaum Law Office successfully provided legal services for the preparation of a customized Share Transfer Agreement, incorporating the client’s requirements regarding restrictions on the transfer and disposal of shares in a legally compliant manner.
As restrictions on the transfer of shares are generally contrary to the principle of free transferability of shares under the Korean Commercial Act, careful consideration must be given to the method and scope of such restrictions in order for them to be legally valid and enforceable.
Taking these considerations into account, Attorney Hee-jae Choi included, in addition to the shares subject to the transaction and the applicable terms and conditions, provisions specifically tailored to Company B, including an obligation to return the shares under certain circumstances and a contractual penalty clause.
Given the importance of shareholder composition for startups, Hwaum also incorporated additional restrictions on the transferee’s subsequent disposal of the shares. Through these provisions, Hwaum successfully prepared and delivered a fully customized agreement specifically designed for Company B, while taking into account both the client’s business objectives and the relevant legal requirements.
Author: Attorney Hee-jae Choi
Reviewed by: Attorney Jeong Jae-kwon