Share transfers, what to check
In the course of my consulting activity, I carry out review work on my client's companies and/or draft the paperwork to formalise the transfer of shares.
Some of the mistakes I come across (and not so rarely, I would add) are characterized by any of the following:
- Disregarding of the requirements on not fully paid shares, or
- Where stamp duty is payable, approving the transfer before a duly stamped stock transfer form is returned to the company, or
- Disregarding any pre-emptive rights, where applicable.
Whilst transferring shares may seem a simple administrative exercise, the things to check beforehand are a great many to make sure the title is effectively passed to the transferee.
In this sense, one should always ask themselves the following questions at the very least:
a) What do the articles of the company provide in respect of share transfers and existing shareholders?
b) Is a board resolution sufficient to approve the transfer?
c) Are the shares being transferred fully paid and, if not, what do the articles require?
d) If there is payable stamp duty or a relief (not an exemption) is applicable, has the stock transfer form been returned from HMRC duly stamped?
e) Has the old share certificate been cancelled and returned to the company?
f) Is any person with significant control changing after the transfer?
Only after the above and all other questions are answered will you be sure to be effecting the share transfer correctly.
If in doubt, it is always better to look into the specific situation and make sure all boxes are ticked so the share transfer is completed correctly and more efficiently.
Thanks for reading!
Compliance Support for UK companies