Generally not. The right to a share of profits attaches to the business share, rather than the shareholder personally. A transfer passes all shareholder rights to the acquirer, including unpaid profits from earlier periods, unless the parties agreed otherwise or that particular claim was separately assigned. A former shareholder therefore generally cannot demand profits for the year preceding the transfer.
Does the right to profits attach to the share or the person?
A business share represents the shareholder’s rights, duties and participation in the company (Section 114(1)). These include the right to a share of profits (Section 123(1)). Crucially, the rights attach to the business share, rather than the original shareholder personally. Transferring the share therefore passes all associated rights to the acquirer.
Who receives unpaid profits from last year?
If a shareholder transfers their share before receiving the previous year’s profit distribution, that right passes with the share to the acquirer, unless the transfer agreement provides otherwise or a claim to an already declared distribution was separately assigned. A former shareholder therefore generally cannot claim profits for a period before the transfer. From the company’s perspective, the profits follow the share.
When does the right to payment arise?
Distinguish the general right to a share of profits from the right to payment. Payment entitlement arises only when the general meeting decides on a distribution (Section 125(1)(b)), and only if the statutory conditions are met. Until that decision, there is no due claim for the former shareholder to take away.
What the agreement should address
If unpaid profits matter to you, address them expressly in the transfer agreement: do prior-period profits remain with the transferor or pass to the acquirer? These details often cause disputes, so we deal with them directly in our business share transfer agreements. We prepare the distribution decision through our general meeting service. If a dispute already exists, we help through shareholder dispute resolution.
This answer provides general information on the law as at 17 August 2026. It does not constitute legal services or replace an assessment of an individual case. The details of your situation may differ. Book a consultation to discuss them.
