Frank and Emma are shareholders in a cell phone company that they started together.Emma provided $10 000 for the hardware,while Frank provided $40 000 for the software and the store itself.Frank decided to make a shareholders' agreement with Emma prior to starting the company to ensure she would not sell her shares to competitors at any time in the future.By doing this,Frank has most likely created which type of share transfer rule?

Question

Quizplus · Accepted Answer

A right of first refusal gives the other shareholders the option to purchase the shares before they can be sold to outsiders. This ensures that the shares remain within the existing shareholder group and prevents competitors from gaining access to proprietary information or trade secrets.

Frank and Emma Are Shareholders in a Cell Phone Company