The Flight Centre Travel Group Ltd (ASX: FLT) share price will be one to watch on Wednesday.
This follows the release of an announcement out of the travel agent giant after the market close yesterday.
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Why is the Flight Centre share price on watch?
Investors may want to keep an eye on the Flight Centre share price today after the company revealed that two of its founders have been selling shares.
According to the release, change in substantial holding notices have been lodged for Flight Centre Travel Group's three founding families. This follows trades by James Management Services and Gehar, which are entities associated with founders Bill James and Geoff Harris respectively.
And while a change in substantial holding notice has been filed for fellow founder and current Flight Centre Managing Director, Graham Turner, he hasn't actually sold any shares.
Mr Turner's notice was filed due to his involvement in a shareholders' deed of pre-emption between the three founding families.
What does this mean?
The release explains that the deed, which was put in place ahead of Flight Centre's ASX listing in 1995, grants each founder certain pre-emptive rights in relation to the other founders' Flight Centre shares.
This means that, subject to limited exceptions, these rights restrict the founders from disposing of their shares unless those shares are first offered to the other founders on a pro rata basis.
As a result, each of the founding shareholders is deemed to have a relevant interest in the founders' combined holdings and therefore each founder is required to provide a change in substantial shareholder notice if trades by the founding shareholders increase or decrease their combined holdings by more than 1%, as reflected in today's announcements.
The three founders still have a sizeable stake between them. Flight Centre highlights that their combined interest represents 22.08% of Flight Centre as of the date of this announcement.
