A stock transfer agreement is a legal document setting forth the details around the transfer of stocks between two or more parties who own shares in a company. The agreement is usually drawn before the actual transfer, and serves as proof that the parties actually agreed to the transfer. The complexity of such documents varies depending on the nature of the company involved, as well as the details of the stock transfer.
Stock can be transferred from one shareholder to the other, or from a shareholder to an individual who does not have a stake in the company. The stock transfer agreement typically has several core elements including the number of shares that are to be transferred, as well as what rate will be used to transfer them.
In some cases, the individual getting the shares has to part with a large sum of money during the transaction. This might require specific ways to pay for the share, including through the use of monthly instalments. The stock transfer agreement usually has clauses which define issues such as the down payment that will be required, as well as how the monthly installments will be paid.
The agreement has to conform to various legal precedents. The company bylaws, if there are any, act as a guide determining the process of stock transfer, which means that the agreement has to conform to these laws. State and federal laws may also come into play in determining this as well. Basically, an attorney has to be present during the drafting and signing of the stock transfer agreement to ensure that all the relevant laws are observed, making the document legal.