It is now possible to request to sell shares in private businesses on the Seedrs’ Secondary Market that weren’t originally purchased through our platform.
If shares in the business are already being offered on the Secondary Market then we have built the process to facilitate shares being transferred to the Seedrs Nominee and sold on our market thereafter.
If the business is new to Seedrs, then we must first sell at least £100k of shares through a secondary campaign (from at least one shareholder). A secondary campaign is a promotion designed to find buyers for the shares being offered by the seller/s. Should this campaign be successful, we can establish the business’s profile on the platform after which both the business and investors under the Seedrs Nominee will have access to the same benefits available to other Seedrs portfolio businesses (see below).
In both cases, it is likely a number of corporate approvals will be required from the business and its shareholders to transfer shares to the Seedrs Nominee. Details of this process and fees are below.
Transferring shares into the nominee means you access all the benefits
Transferring shares to the Seedrs Nominee grants access to the same benefits as existing Seedrs Nominee asset holders including: portfolio management tools, investor community, business updates, professional grade investor protections and of course, our Secondary Market where you can list shares to sell.
Regardless of your current shareholding, you will need the business’s cooperation
The current shareholding may be held either directly (named on the cap table) or as part of a nominee structure (represented by another entity). In both instances there are likely to be restrictions either that the business has established in their Articles of Association or Shareholder Agreement to limit transferring or selling shares. These restrictions will require the business’s cooperation to overcome; we cannot unilaterally change them.
If you are an individual shareholder with a small holding it may be difficult to get the business to agree to this, please do make us aware of your interest however. It is likely the best (and only) route will be to form a group of investors with the same goal and make a formal approach.
When you transfer to the nominee, the nominee will exercise shareholder rights on your behalf
Any rights that you, as an existing shareholder, have will be transferred to the Nominee, who will exercise these rights on your behalf. Depending on the shares you hold, it may be that we will need to agree additional shareholder rights with the business to match our minimum investor protection requirements, e.g. voting rights, pre-emption rights, and tag/drag along protections.
The process is different if the business is already with Seedrs
Where the business has raised funds with Seedrs previously the process is simpler as we will already be on the business’ cap table and have our shareholder rights in place. In these cases, transferring your shares to the Seedrs Nominee needs:
- Approval from the business and its shareholders for the sale and transfer of shares to Seedrs (preferably a blanket exception to allow future transfers and sales, reducing administrative burden in the future);
- Agreement that any shares transferred will inherit the existing rights held by by Seedrs;
- Shareholder register from the business confirming you are a shareholder at the time of the requested transfer.
We have built a facility to enable this transfer transaction completely online and paperless.
Fees for investors in portfolio businesses
The fees associated with this are a 3.5% transfer fee, paid upfront of the total amount to be transferred and depending on the total value transferred there may be a setup fee. Please note, this doesn’t include listing these shares on the Secondary Market which attracts a 1.5% sales fee should a buyer be found and once transferred under the Seedrs Nominee, if held and not sold, carry of 7.5% will apply.
Carry is charged on the profits made whilst the shares are held under the Seedrs Nominee. Shares transferred start with a zero profit and profit is calculated (assuming there is one) from the date of the transfer to the date sold (profits made outside of the nominee aren’t charged).
Conditions and fees for business and investors in new to Seedrs businesses
Where the business has not previously raised capital on Seedrs and Seedrs is not already a shareholder then the following extra conditions and fees apply:
- Seedrs becomes a shareholder with our standard rights agreed;
- £2.5k setup fee to cover due diligence checks, financial promotion creation and sign-off;
- An initial £100k sold through a secondary campaign within 40 days, this may come from a single investor or multiple; and
- 5% initial fee, (once the business has passed its initial secondary offering hurdle, shares can be transferred later at a rate of 3.5% and either held in the nominee or sold on for an additional fee of 1.5%).
Through our partnership with Capdesk it is possible, as a Direct Shareholder, to list shares on our market for sale and not transfer under the Seedrs Nominee whilst they are being sold. This requires the business to have an agreement with Capdesk and be an existing Seedrs portfolio business. The same conditions apply as per above to set up a business for the first time on Seedrs which can be done via Capdesk. Please refer to a separate post regarding our joint proposition with Capdesk.