Can you give away or sell only a portion of your shares?

Yes. A shareholder may transfer, sell, or give away only a portion of the shares they hold in a corporation, subject to applicable restrictions. The transfer does not have to involve their entire ownership interest.

This option can be used, for example, to bring in a new shareholder or investor, gradually transfer a business to a family member, reward a key employee, carry out estate planning, or implement a corporate reorganization.

Before proceeding, however, it is important to verify whether the company’s articles of incorporation, a shareholders’ agreement containing buy-sell provisions, or a buy-sell agreement among shareholders—as applicable—impose restrictions on the transfer of shares. These applicable documents may, in particular, provide for:

• a right of first refusal—which may also constitute a right of preemption—in favor of the other shareholders;
• the obligation to obtain authorization from the board of directors or the other shareholders prior to the transfer;
• other conditions or restrictions applicable to the sale, gift, or transfer of shares.

These restrictions are common in private companies, as they allow, among other things, for control over the entry of new shareholders.

It is also important to verify the class of shares that will be sold, gifted, or transferred. Not all shares necessarily confer the same rights. Depending on their class, they may confer different voting rights, a right to dividends, or specific rights upon the company’s liquidation—particularly regarding the distribution of remaining assets. The choice of shares to be transferred can therefore affect control, financial participation, and management of the company.

Once the transfer is complete, the required corporate formalities must be fulfilled. This includes documenting the transfer and updating the securities register, the transfer register, and other relevant corporate records. If the corporation uses stock certificates, these must be issued or replaced, as applicable. The required filings with the relevant authorities must also be updated if the transfer alters the information that must be reported to them.

Finally, the sale or gift of shares may have legal, tax, and financial consequences. It is therefore recommended to assess the effects of the transaction before proceeding with the transfer.

In summary, it is possible to transfer only a portion of the shares held in a corporation, subject to applicable restrictions. Before proceeding, the company’s current documents must be verified, the required corporate formalities must be completed, and the records and information to be reported to the relevant authorities must be updated.