A right of first refusal (“förköpsförbehåll”) and post purchase rights (“hembudsförbehåll”) is something we recommend that your company has, especially in an early phase. With this, you can prevent unwanted shareholders and that key persons who leave sell to existing shareholders. Both these rights can be placed in both the articles of association (“bolagsordningen”) and in the shareholders’ agreement.
Right of first refusal
This means that a shareholder who wishes to sell their shares first must offer them to existing shareholders, before offerring them to someone who is not a shareholder.
Post purchase right
This means that anyone who has acquired shares and is not a shareholder before, immediately has to offer the shares they bought to the existing shareholders. The existing shareholders then have the option to either buy the shares, or let the new shareholder keep them.
Where do you need this?
StartupTools recommends that you have these rights both in the articles of association and in the shareholders’ agreement. The articles of association has higher precedence and trumps what the shareholders’ agreement says. Since the articles of association is a public record (anyone can request it from the Swedish Company Registration Office, Bolagsverket), anyone buying shares in the company is assumed to know it. Therefore, you cannot buy shares in a company that has post purchase rights and claim you did not know that.
The same is not true for the shareholders’ agreement. This is a private agreement between a certain number of persons and companies. Those who have not signed the shareholders agreement are therefore not bound by it.
If we assume a person A, who has signed a shareholders’ agreement, which contains both right of first refusal and post purchase rights, and then sell their shares to a person B, without offerring the shares to the other shareholders. In this situation, A has violated the shareholders’ agreement, but B has not. This means that B get to keep their shares. The only thing that the other shareholders can do is to claim compensation from A for breach of the shareholders’ agreement.
But if the company had had the right of first refusal and post purchase rights in the articles of association, then B would have been bound by them, even if B had not signed the shareholders’ agreement. This means that the other shareholders could have B’s purchase of the shares cancelled.
This is an important difference, and this is the primary reason why you want to have the right of first refusal and post purchase right in the articles of association too.
So why not have it only the articles of association? You can, but the shareholders’ agreement is often more specific and contains other things than just the rights. Therefore, it is good to have the rights both in the articles of association and the shareholders agreement.