Syndicated shares are those parts of the capital of a company that cannot be freely transferred because such shares are subject to an agreement. This means that in order to transfer the syndicated shares it is necessary to previously reach an agreement with the rest of the shareholders.
What are syndicated shares for?
Syndicated shares allow shareholders with shared ideas and interests to agree to vote by mutual consent. In this way they obtain greater power of control and decision in the Company. By restricting the free transmission of actions of a company, shareholders achieve several things:
- Protect yourself
- Avoid the sale of certain shares without your consent through consent clauses, also called placets.
- Get an advantage when opting for shares that you want to assign through trial and error or option.
How are the shares syndicated?
Syndicated shares must meet a series of characteristics so that they can be considered as such:
- There must be a shareholders' agreement which provides the guidance for decisions to be made
- The agreement is private and must be signed by all interested shareholders
- The deed of the agreement must be made publicly by a notary.
- You must make a period of duration of the established agreement and a way to resolve it in advance
- The restrictions contemplated in syndicated shares must be explicitly included in the Company's Bylaws, either when the company is founded or through subsequent statutory amendments.
- In the case of a family business It can lead to the creation of a Family Protocol in order to organize the family's relations with the company, both when it comes to inheritance and when it comes to governing it.
However, syndicated shares cannot be so restrictive as to prevent a shareholder from being able to transfer the shares they want and end up becoming what is often known as a prisoner of their titles.