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What is the difference between the right to transfer shares in a joint-stock company and in a limited liability company?

Shares in Joint Stock Companies are free to transfer, unless otherwise provided for in the company charter. However, there is a restriction on transferring shares of the founding shareholders within 3 years from the date that the Enterprise Registration Certificate is granted. Specifically, the founding shareholders have the right to freely transfer their shares to other founding shareholders and may only transfer their ordinary shares to persons other than founding shareholders if approved by the General Meeting of Shareholders.

In contrast, the transfer of capital contributions in a Multiple member Limited Liability Companies must comply with the following procedures:

    • Offering to sell such capital contributions to other members in proportion to their contributed capital amounts in the company on the same terms;
    • Transferring to non-members under the same conditions applicable to the remaining members only when the remaining members do not purchase or do not fully purchase within 30 days from the date of offer.

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