A Control Sale refers specifically to a transaction involving the sale of a significant percentage of a company's shares by its existing shareholders to a buyer or group of buyers.
Based on the provided reference, a Control Sale is defined as:
Understanding the Definition of a Control Sale
A Control Sale is a specific type of transaction undertaken by existing owners (Shareholders) of a company's stock. It involves the transfer of a substantial portion of the company's ownership stake to a new party or related parties.
Here are the key components based on the definition:
Key Elements of a Control Sale
A transaction qualifies as a Control Sale if it meets the following criteria:
- Parties Involved: The sale is conducted by one or more Shareholder(s) of the company.
- Buyer: The shares are sold to any Person or group of related Persons.
- Transaction Type: It can be a single transaction or a series of related transactions.
- Threshold: The amount of Shares sold must meet one of two conditions:
- Condition 1: Aggregating at least 30% of all Shares then outstanding.
- Condition 2: Shares which, together with all other Shares theretofore sold to any such Person or... (The definition is incomplete here, but implies previous sales to the same buyer(s) contributing to a threshold).
In essence, a Control Sale signifies a transaction where enough shares are transferred to potentially shift or consolidate control of the company into the hands of the buyer(s), typically indicated by reaching or exceeding a specific ownership percentage threshold (like the 30% mentioned).
This definition is often found in legal agreements, such as shareholder agreements or investment documents, to define events that trigger specific rights or obligations among shareholders or the company.
