Transfer of shares

Transfer shares from one person to another, whether on sale or gift of the shares

It is also important that a company has appropriate share transfer provisions in the articles or a shareholders' agreement.

• Procedures
• Our service
• Costs
• Your instructions
• Warnings

Procedures
In all cases, the first stage is to check what restrictions, if any, there are in the company's articles on share transfers. These vary widely from a simple discretion for the directors to be able to refuse the transfer of any share to very detailed provisions, most commonly requiring shares to be offered to existing members of the company. See further for typical clauses.

On a sale, a contract should set out the terms of the sale and, at the least, provide that the shares are transferred free of any encumbrances. The shares are transferred by means of a stock transfer form. If stamp duty is payable, this form should be stamped, and submitted to the company. The transfer should be considered by the board, together with any provisions in the articles affecting the transfer. The directors approve the transfer and resolve that the register of members be brought up to date and a new share certificate issued.

On a gift, the procedure is the same, except there is no contract of sale. Though not strictly necessary, we will prepare a simple memorandum setting out the details of the gift. The other difference is that no stamp duty will be payable.

In some cases, the share transfer may be part of a larger transaction. In such a case, we should be advised of the facts and may be able to deal with the whole matter.

Our service
The Company Law Solutions service provides all required:

• review of the articles, if required
• drafting share transfer provisions for articles or shareholders' agreement
• contract of sale or memorandum of gift
• stock transfer form
• minutes of directors' meetings
• our straightforward, step by step guide to completing the procedures
• checking by us when the documents are completed (if required)
• share certificates and/or completed registers (if required).

Costs
Please refer to our prices page.

Your instructions
To set up different share classes we would need the following information:

• whether the transfer is a sale or a gift. If a sale, the consideration
• names and addresses of the parties
• how many, and what class of shares are being transferred
• a copy of the company's articles of association.

Warnings

1. Anyone buying shares in a company will obviously need to take care that they are aware of the company's financial position, assets, liabilities, etc. When the purchase price warrants it, this usually means employing accountants or solicitors (or, usually, both) to investigate the company ('due diligence') and to draw up a detailed contract for the purchase of the shares. We cannot undertake any work of that kind, or advise of any tax or investment implications of a share sale or purchase.
2. Stamp duty is payable on a sale of shares at the rate of 50 pence per £100 consideration for the shares (or part thereof), except where the consideration does not exceed £1,000.
3. A sale or gift of shares may have tax implications for both parties. We cannot advise on tax matters.
4. Shares that are not fully paid carry with them a liability to pay the unpaid amount when it becomes due to the company. This is a liability that will apply whether the shares are acquired by purchase or by gift.

The following pages may also be useful:

• Introduction to shares
• Background information on share transfers
• Share classes
• Share certificates
• Dividends
• Voting rights