Internal market of the shares
Besides the need for adequate protection, a shareholder wishes to obtain a certain return on its investment and at certain times a partial liquidity. Our experience is that this is a common question in companies that have both active and non-active shareholders. This return can be provided by the establishment of a dividend policy that on the one hand provides return to the shareholders but on the other hand takes into account the investment needs of the company.
In order to meet the liquidity needs of a number of shareholders, some exit opportunities can also be developed in the form of periodic repurchase programs or an internal market, taking into account the resources the company has available for this purpose.
This allows shareholders to diversify their assets or to obtain sufficient resources to finance their own projects. Conversely, this can provide a stabilization and streamlining of the shareholding of the company because demotivated shareholders are offered an exit.
The liquidity programs can have following forms:
- Repurchase programs by the company, setting up a holding company or creation of an internal market that offers periodic (partial) liquidity to the existing shareholders
- Dividend policy and determination of a payout ratio
- Establishing written agreements regarding exit at term (exit clauses, put options, pricing formulas, tag along and drag along rights, ...)