Sale and Purchase of Shares in LLC

Publication date: 04.06.2026

A participatory interest (shares) in the charter fund of an LLC is a complex property-corporate object. It reflects a person’s participation in the charter capital of the company and, at the same time, certifies a set of rights and obligations of a participant.

On the one hand, a participatory interest (shares) has a property-related nature: it may have a nominal value, actual value, and market value; it may be alienated, transferred by inheritance, pledged, or subjected to enforcement. On the other hand, a participatory interest embodies the corporate status of a participant: the right to participate in the management of the company, receive information, participate in the distribution of profits, receive a liquidation quota, and exercise other rights provided by law and the company’s charter.

The new Law on LLCs directly links the size of a participant’s participatory interest to the ratio between the nominal value of that participant’s interest and the amount of the company’s charter fund. At the same time, the actual value of a participatory interest is determined as the portion of the value of the company’s net assets that is proportionate to the size of the participant’s interest. This is of fundamental importance when valuing an interest, upon a participant’s withdrawal, acquisition of an interest by the company, enforcement against an interest, and protection of participants’ rights.

Accordingly, a participatory interest in an LLC cannot be treated as an ordinary thing. It is a special object of civil circulation that combines property value and corporate power.

Sale and Purchase Agreement of Shares as a Corporate Transaction

A sale and purchase agreement for a participatory interest in an LLC is an agreement under which the seller undertakes to transfer to the buyer the participatory interest, or part thereof, owned by the seller in the company’s charter fund, and the buyer undertakes to accept such interest and pay the agreed price for it.

However, the specific nature of such transaction lies in the fact that its result is not only the transfer of a property asset, but also a change in the corporate composition of the company. The buyer of the participatory interest becomes a participant of the company, acquires corporate rights, and assumes the corresponding obligations.

Therefore, a sale and purchase agreement for a participatory interest has a dual nature:

Element	Content
Civil-law element	Transfer of a property right for consideration
Corporate element	Change in the composition of the LLC participants
Registration element	Transfer of title to the participatory interest is linked to making an entry in the state register
Protective element	Pre-emptive rights of other participants and the interests of the company are taken into account
Control element	When acquiring 50% or more of the participatory interest, special obligations arise toward minority participants

Parties to the Sale and Purchase Transaction of Shares

The parties to the agreement are the seller of the participatory interest and the buyer of the participatory interest.

The seller may be an LLC participant who owns the participatory interest, or part thereof, being alienated.

The buyer may be another participant of the company or a third party, unless the company’s charter establishes restrictions or a prohibition on alienation of a participatory interest to third parties.

The law permits the free transfer of a participatory interest to another participant of the company, unless the charter requires the consent of the company or other participants. This means that intra-corporate circulation of participatory interests is more flexible than alienation of an interest to a third party. When alienating an interest to a third party, it is necessary to take into account the restrictions provided by law, the charter, and the pre-emptive right of the company’s participants.

Special importance should be given to verifying the legal status of the buyer. If, as a result of the transaction, the number of participants of the company exceeds the statutory limit, corporate consequences may arise, including the need to reorganize the company. The law establishes that the number of participants in an LLC must not exceed fifty persons.

Material Terms of a Sale and Purchase Agreement of Shares

For proper execution of the transaction, the agreement must contain at least the following terms:

Term	Practical significance
Information on the seller and the buyer	Identification of the parties to the transaction
Information on the company	Name, TIN, registration details, address
Size of the participatory interest being alienated	In percentage, fraction and/or nominal value
Price of the participatory interest	Fixed price, price formula, or valuation procedure
Payment procedure	Lump-sum payment, instalments, conditional payment
Confirmation that the seller owns the participatory interest	Guarantee of legal title
Absence of encumbrances	Absence of pledge, arrest/seizure, prohibition, or court dispute
Compliance with the pre-emptive right	Confirmation that participants and the company have been notified
Moment of transfer of rights	Taking into account the entry in the state register
Registration obligations of the parties	Who submits the documents, deadlines, liability
Representations and warranties	Protection of the buyer and the seller
Liability of the parties	Penalty, compensation for losses, termination
Applicable law and dispute resolution procedure	Court, arbitration, mediation, jurisdiction

It is particularly important to state that the seller guarantees that: the participatory interest belongs to the seller on lawful grounds; the interest has been paid up in the relevant part; the interest is not under arrest/seizure, pledged, or subject to dispute; there are no corporate restrictions preventing the sale; and the pre-emptive right of the participants and the company has been complied with.

Form of the Sale and Purchase Agreement of Shares

The new Law on LLCs provides that a transaction for the transfer of a participatory interest, or part thereof, in the charter fund of a company must be made in simple written form, unless the company’s charter provides for a requirement of notarization. Failure to comply with the form of the transaction established by law or by the charter, as well as failure to comply with the requirement for state registration of the transfer of the participatory interest, may result in the transaction being declared invalid.

This means that before preparing the agreement, it is necessary to review the company’s charter. If the charter requires notarization of the agreement, simple written form will be insufficient. If the charter does not contain such requirement, the agreement may be concluded in simple written form.

Thus, the LLC charter becomes of key importance: it may tighten the procedure for alienation of participatory interests, introduce the consent of the company, consent of the participants, notarization, restrictions on sale to third parties, and other corporate filters.

Sale of Shares to Another Participant of the Company

Sale of a participatory interest to another participant of the LLC is the simplest form of circulation of participatory interests. As a general rule, a participant has the right to transfer its participatory interest, or part thereof, to one or more participants of the company. In this case, the consent of the company itself or of other participants is not required, unless otherwise provided by the company’s charter.

This approach corresponds to the closed but flexible nature of an LLC. The law proceeds from the idea that existing participants are already within the corporate structure, and therefore the transfer of an interest between them does not create the same risk for the company as the appearance of a new third party.

However, even when selling a participatory interest to another participant, it is necessary to:

review the charter for restrictions;
verify that the interest has been paid up by the seller;
execute a written agreement;
notify the company of the transfer of the interest;
ensure that an entry is made in the Unified State Register of Business Entities.

Sale of Shares to a Third Party

Sale of a participatory interest to a third party is a more complex procedure. The law permits such sale unless it is prohibited by the company’s charter. At the same time, the rules on the pre-emptive right to purchase the participatory interest by other participants of the company and, in certain cases, by the company itself apply.

This means that the seller may not freely sell the participatory interest to a third party without taking into account the interests of the other participants. The seller must first offer the participatory interest being alienated to the existing participants of the company, indicating the price and other terms of sale.

The purpose of the pre-emptive right is to protect the closed composition of the LLC. The company’s participants are given an opportunity to prevent the entry of an undesirable third party into the company, thereby preserving the balance of corporate control.

Pre-emptive Right to Purchase a Share

The pre-emptive right means that, when selling a participatory interest to a third party, the other participants of the company have a priority right to acquire such interest on the terms offered to the third party.

Under the new Law, a participant intending to transfer a participatory interest to a third party must notify the other participants and the company itself in writing, indicating the price and other terms of alienation. A participant wishing to exercise the pre-emptive right must, within the prescribed period, notify of their intention to acquire the entire interest or part thereof.

If several participants wish to acquire the interest, distribution may be made in proportion to their interests in the charter fund, unless the charter or an agreement among the participants establishes a different procedure.

Key deadlines:

Situation	Deadline
A participant notifies of their intention to exercise the pre-emptive right	7 days
Participants and/or the company exercise the pre-emptive right	1 month, unless another period is established by the charter or an agreement
Claim for transfer of the buyer’s rights and obligations in case of breach of the pre-emptive right	3 months from the moment when the person became aware or should have become aware of the breach

A breach of the pre-emptive right does not always mean automatic invalidity of the transaction. The law provides for a special remedy: a participant or the company may demand, through court proceedings, the transfer to themselves of the buyer’s rights and obligations. This mechanism is aimed not at destroying the transaction as such, but at replacing the buyer with the proper person.

Transfer of Title to a Share and State Registration

One of the most important features of the sale and purchase of a participatory interest in an LLC is that title to the interest does not transfer merely upon signing the agreement. The new Law establishes that title to a participatory interest, or part thereof, transfers to another person from the moment the relevant entry is made in the Unified State Register of Business Entities. Such transfer is confirmed by an extract from the register.

This rule is of fundamental importance. Signing the agreement creates an obligation between the seller and the buyer, but the full corporate effect arises after the registration entry is made. Before the relevant entry is made, disputes may arise as to who is entitled to vote, receive dividends, request information, and participate in the management of the company.

Therefore, the agreement must expressly provide:

who is obliged to prepare the documents for registration;
who submits the documents to the registering authority;
within what period the parties must perform the registration actions;
what consequences arise if one of the parties evades performance;
who bears the expenses related to registration;
what happens to the agreement if registration does not take place.

Sale of an Unpaid Shares

The law establishes a special restriction: if a participant’s interest has not yet been fully paid up within the prescribed period, it may be transferred to another person only in the paid-up part.

This rule protects the company and creditors from fictitious circulation of unpaid corporate rights. The buyer must verify whether the seller has fully made the contribution to the charter fund. If the contribution has not been made in full, the buyer risks acquiring not the entire declared volume of the participatory interest, but only its paid-up part.

To minimize the risk, the agreement should include the seller’s representation that the participatory interest has been fully paid up and the seller’s obligation to compensate losses if such representation proves to be inaccurate.

Sale of a Controlling Shares and Protection of Minority Participants

A novelty of the new Law on LLCs is the special rule on acquisition of 50 percent or more of participatory interests. A person who becomes the owner of 50 percent or more of the charter fund, if that person previously did not own any interests or owned less than 50 percent, must, within 15 days, offer the minority participants to sell their interests to that person at market value. If, within 30 days, a participant agrees in writing to sell their interest, the person holding 50 percent or more is obliged to acquire the offered interest.

This rule is aimed at protecting minority participants in the event of a change of corporate control. Acquisition of a controlling block of participatory interests may radically change the balance of management within the company; therefore, minority participants are given an opportunity to exit the company by selling their interest at market value.

This mechanism may be regarded as an analogue of a mandatory offer in corporate law. Its purpose is to prevent a situation where a minority participant remains in a company with a new controlling participant without the possibility of a fair exit.

Risks of Invalidity of the Transaction

A sale and purchase transaction for a participatory interest may be challenged or declared invalid in the following cases:

Risk ground	Possible consequence
The form of the transaction has been violated	The transaction may be declared invalid
The charter’s requirement for notarization has not been complied with	Invalidity or refusal of registration
No entry has been made in the state register	No transfer of title to the participatory interest
The participants’ pre-emptive right has been breached	Transfer of the buyer’s rights and obligations to a participant or the company
The participatory interest has not been fully paid up	Possibility to transfer only the paid-up part
The charter prohibits sale to third parties	The company may be obliged to acquire the interest, or the transaction may be challenged
Required consent of the company or participants has not been obtained	Risk of refusal to recognize the transfer of the interest
The participatory interest is pledged, under arrest/seizure, or subject to court dispute	Risk that transfer of the interest will be impossible
The seller is not the lawful owner of the participatory interest	Risk of vindication and corporate claims
The transaction was made to circumvent the law	Risk of the transaction being declared sham, simulated, or invalid

Practical Structure of a Sale and Purchase Transaction of Shares

For safe execution of the sale and purchase of a participatory interest, it is recommended to follow the sequence below:

Stage	Action
1	Review the LLC charter
2	Verify the composition of participants and the size of their interests
3	Verify payment of the participatory interest by the seller
4	Check encumbrances, pledges, arrests/seizures, and court disputes
5	Determine the price of the participatory interest
6	Notify the participants and the company in case of sale to a third party
7	Wait for the period for exercising the pre-emptive right
8	Obtain consents if required by the charter
9	Sign the sale and purchase agreement for the participatory interest
10	Pay the price of the participatory interest
11	Notify the company of the transfer of the interest
12	Submit documents to the registering authority
13	Make an entry in the Unified State Register of Business Entities
14	Obtain an extract from the register
15	Amend the company’s corporate documents

Representations and Warranties in the Agreement

In modern corporate transactions, the seller’s representations and warranties are of particular importance. They allow the buyer to protect themselves against hidden risks.

It is recommended to include the following seller’s representations in the agreement:

the seller is the lawful owner of the participatory interest;
the participatory interest has been fully paid up;
the participatory interest is not pledged, arrested/seized, or encumbered by third-party rights;
there are no court disputes in relation to the participatory interest;
the sale of the participatory interest does not violate the company’s charter;
the pre-emptive right of the participants and the company has been complied with;
there are no corporate resolutions restricting alienation of the participatory interest;
the seller has disclosed to the buyer all material information about the company;
the company is not undergoing liquidation, reorganization, or bankruptcy, if this is material for the buyer;
there are no hidden obligations capable of materially reducing the value of the participatory interest.

For the buyer, it is also important to include representations of the company or the seller regarding the financial condition of the LLC, availability of assets, liabilities, tax risks, court disputes, and transactions with affiliated persons.

Price of a Share: Nominal, Actual, and Market Value

In practice, it is necessary to distinguish between three types of value of a participatory interest:

Type of value	Content
Nominal value	Value of the participatory interest in the company’s charter fund
Actual value	Part of the company’s net assets proportionate to the size of the participatory interest
Market value	Price at which the participatory interest may be sold to an independent buyer

The price under a sale and purchase agreement for a participatory interest may differ from its nominal value. For example, an interest with a nominal value of UZS 10 million may be sold for UZS 500 million if the company has assets, profit, client base, licenses, or other commercial advantages.

For the seller, it is advantageous to fix a definite price and the buyer’s obligation to pay it before registration of the transfer of the participatory interest or through a secure settlement mechanism. For the buyer, it is advantageous to provide for withholding part of the price until completion of registration and confirmation of the absence of hidden obligations.

Importance of the Company’s Charter

The LLC charter is the main corporate document that may significantly change the procedure for alienation of participatory interests. The law expressly provides that the charter must contain information on the procedure for transfer of a participatory interest, or part thereof, to another person.

The charter may provide for:

prohibition on sale of a participatory interest to third parties;
necessity of the company’s consent;
necessity of consent of other participants;
notarized form of the transaction;
special procedure for exercising the pre-emptive right;
non-proportional distribution of the participatory interest being sold among participants;
another period for exercising the pre-emptive right;
restrictions on the maximum size of a participant’s interest;
rules for transfer of an interest to heirs or legal successors;
procedure for actions in case of refusal by participants or the company to acquire the interest.

Therefore, any sale and purchase transaction involving a participatory interest must begin not with drafting the agreement, but with analysis of the charter.