Companies in private markets typically have broad rights to control who holds their shares. This is done to protect the company, existing investors, and the cap table structure.
How companies can block transfers:
ROFR (Right of First Refusal): The company exercises its right to purchase your shares before you sell them to a third party.
Board approval: Many shareholder agreements require board consent for any share transfer. The board can refuse without explanation.
Transfer restrictions: Some agreements include lock-up periods (e.g., no transfers within 12 months of investment) or blanket transfer restrictions.
Regulatory reasons: If the proposed buyer doesn't meet accreditation requirements, the transfer cannot legally proceed.
Why do companies do this?
To keep their cap table clean (fewer, known shareholders)
To prevent shares from going to competitors or unfriendly parties
To maintain compliance with securities regulations
To control the timing of liquidity events
What you can do: Review transfer provisions in your SPV agreement before investing. Contact Wealt support if you want to explore a secondary sale - we can help navigate the process.