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Entrepreneurs who encounter the purchase or sale of a “company” (or part of a “company”) for the first time inevitably also face the issue of the transfer of business shares.
Below, certain questions that regularly arise in practice are considered.
In more detail:
- When is a “transfer of business shares” required?
- 1. The role of negotiations in the early stage
- 2. The role of company documentation in the advisory process
- 3. Rights of existing members regarding the transfer of business shares
- 4. Contractual structure of the transfer of business shares (very common in practice)
- 5. The “director issue”
- 6. Tax payment on the sale of a business share
- 7. More on the importance of submitting documentation to the court
- 8. Relations with business partners after the change
IMPORTANT NOTICE: all texts published on lucija.legal – although written by a legal professional with several years of experience – are written in simple, conversational language. Legal terminology is intentionally omitted for easier understanding, and certain legal concepts are described in a very simplified manner – while their essential meaning is preserved. All texts and examples are provided solely for the purpose of educating readers and informing the public. None of the texts contain individualized or specific legal advice, including matters related to a transfer of business shares in Croatia. For resolving concrete legal issues, it is expressly recommended that you consult your attorney.
When is a "transfer of business shares" required?
When there is an intention to buy or sell a company or part of a company — as a rule, this cannot be done without a transfer of business shares.
But it is best to start from the basics.
So it is easier to follow.
Persons who are registered in the court register of the company as members of the company are, in fact, the holders of the company’s business shares.
In simple terms — this means that those persons are the “owners” of that company.
So: members = holders of business shares = owners of the company.
To clarify immediately — a “member of the company” is not the same as the position of “company director”.
These are two completely different roles.
Company director ≠ company owner.
Who the current member/“owner” of a company is can be easily checked on the court register website — here.
For all companies in Croatia.
Therefore — when a person wants to become an “owner” of a company, they must become the holder of its business share.
For that, a transfer of business shares is required.
1. The role of negotiations in the early stage
- What is the company actually worth? Share capital is one thing, but the market value of a company is something entirely different. In practice, there is often a dilemma between obtaining a professional valuation or making an independent estimate …
- What is the company’s financial health? In addition to reviewing financial statements and balance sheets, the analysis usually also includes profitability, receivables, debts, real estate, taxes, contractual obligations …
- Legal review of the business (so-called due diligence) — in more complex transactions or in companies with a long operating history — the parties and their legal teams very often assess legal risks, disputes, validity of signed contracts, employee obligations, tax exposure, licenses, and the duration and relevance of permits …
- What exactly is being bought/sold? — is it only the business share and tangible assets, or also “intangible assets”, such as brand, reputation, trademarks, intellectual property, social media accounts …
2. The role of company documentation in the advisory process
For consulting with a qualified professional regarding the transfer of business shares, it is important to prepare the company’s valid documentation.
In practice — good preparation significantly affects the efficiency and success of the entire advisory process.
This is because — if the persons involved do not have the currently valid Statement of Incorporation or Memorandum of Association — the consultation will be limited due to the lack of key information.
It is roughly comparable to visiting a medical specialist without being able to provide the results of previous examinations.
In short — the better and more comprehensive the prepared documentation, the faster and more efficient the advisory process will be.
3. Rights of existing members regarding the transfer of business shares
Very often — memoranda of association “hide” provisions that protect the other members of the company from business shares being transferred “without control” to third parties.
This is also logical.
Because — whether the company is operating well or not — a member will certainly not want the decisions of the general meeting to depend tomorrow on a person they do not even know and/or who has no real interest, and to whom their “former colleague” transferred their business share without their knowledge.
Memoranda of association often contain various types of transfer restrictions to which — in practice — special attention is paid during the share transfer process.
4. Contractual structure of the transfer of business shares (very common in practice)
In practice, it is very common that two (or more) agreements are concluded for the transfer of business shares.
The essential document, without which the process cannot proceed, is the business share transfer agreement — which is solemnized by a notary public.
After solemnization, the notary sends this agreement to the court register, where the change of company member is officially recorded.
That agreement remains stored with the commercial court and is “public”.
What does “public” mean?
It means that anyone may request access to agreements stored in the court register.
However, for various reasons, parties often do not want the share transfer and everything connected with it to be visible to “everyone”.
This is especially true when the company is larger and the transaction more complex — which usually includes various conditions, deadlines, warranties, security instruments, and representations.
In such circumstances, it is common in practice to conclude an additional agreement.
Most often this is a business share sale and purchase agreement, but it may also be a gift agreement, exchange agreement, debt settlement agreement, or similar.
This second agreement typically includes the price, payment method, instalments, interest, deadlines, all company obligations, members’ rights, existing company contracts, asset relations, permits, taxes, insurance, loans, guarantees, and similar provisions.
However, this agreement is not stored in the court register and is not publicly available.
GOOD TO KNOW: A notary public is required to charge for the solemnization of a business share transfer agreement in proportion to the “purchase price of the share“.
5. The "director issue"
In the transfer of business shares — the “director issue” often arises, although it is not mandatory in every case.
Namely, new members of the company may insist that a new person be appointed as director — a person they trust.
Why?
Because the director is (most often) authorized to represent the company in dealings with third parties.
In other words — the director can enter into contracts that will bind the company.
For this reason, in practice, the “director issue” is often addressed before the purchase or sale of a business share is completed — in a way that satisfies the new and existing members (as well as the director).
6. Tax payment on the sale of a business share
Whether a person who has transferred a business share to another person will have to pay tax (capital gains tax) depends on the circumstances of the individual case.
Capital gains tax is generally calculated as the difference between the acquisition value and the sale value of the business share, applying the prescribed tax rate, which at the time of writing this post (January 2026) amounts to 12%.
In other words, simplified:
(The amount for which the business share was sold) minus (the amount for which the business share was acquired) = the tax base for calculation.
When this tax is not paid (under the currently applicable regulations, January 2026):
- if you acquired the business share before January 1, 2016;
- if more than two years have passed since the acquisition of the business share;
- if the sale is carried out between spouses and relatives in the direct line and other close family members;
- if the sale is carried out between divorced spouses (in connection with the divorce);
- in connection with the inheritance of financial assets.
GOOD TO KNOW: The disposal of a business share must be reported to the tax authority within a short statutory deadline.
7. More on the importance of submitting documentation to the court
Although the buyer becomes a member of the company at the very moment the business share transfer agreement is concluded — this information is also entered into the Company’s Book of Business Shares. In addition, the person is required to report the change to the competent commercial court and thereby make it visible to everyone.
However, since a notary public participates in the transfer — the notary will promptly report the change to the competent commercial register court and submit all required supporting documentation.
The notary public is also obliged to deliver one copy of the transfer agreement to the tax authority.
GOOD TO KNOW: If the transaction concerns only the legal act of transferring a business share, an amendment to the memorandum of association is generally not required.
8. Relations with business partners after the change
As a rule, related partners of the company are informed of the change in company membership as soon as possible — banks, suppliers, long-term clients, other contractual counterparties (e.g. under lease agreements), accountants, insurance companies, leasing companies, and similar.
Careful planning is key
The transfer of business shares is a process that requires a high level of diligence.
This applies at the level of the buyer and seller, as well as at the level of the notary public and attorneys preparing the documentation, and all other persons involved in the process.
Practical experience shows that it is important to act in a timely manner and avoid handling matters “at the last minute” or “under deadline pressure” — as this most often increases the risk of mistakes, omissions, oversights, or in the worst case — court disputes.
If, as an entrepreneur, you are seeking more detailed legal support in property-law and business matters — you can find more information about cooperation options here.
