9 easy steps to making a share transfer

Lawpack on March 27, 2020

This excerpt from our expert guide, How to Run a Limited Company, outlines the steps you need to take when transferring shares in a limited company.

1. Get approval from the board

First of all, you need to ensure that the person to whom you wish to transfer the shares has the board’s approval.

You may need to watch out for pre-emption rights, which means another person (existing shareholder or anyone else) has the right to buy these shares.

Lawpack publishes an Approval and Register of Transfer of Shares template, which can help the directors to record their approval and the directors’ agreement to transfer the shares.

2. Sign a contract

Before you transfer shares in a limited company that you are selling, it would be as well to get the buyer and seller to sign an agreement as to what is to happen.

A suggested form of agreement (contract) – called Contract for Sale of Shares in a Private Company – is included on our guide How to Run a Limited Company.

If only you and the buyer are shareholders in the company, you can alternatively use our solicitor-approved template form Agreement to Sell & Buy Shares in Limited Company.

3. Get a share transfer form

Once the name of the transferee has been agreed, get a blank share transfer form. Lawpack provides a solicitor-approved stock transfer form template which includes expert guidance to help you complete the legal form.

4. Fill in the stock transfer form

Complete the stock transfer form as far as you (the company secretary) are able and send it to the person transferring the shares (the transferor), who should send it to the company secretary with their old share certificate for it to be cancelled.

5. Send the transfer form to the transferee

Send the transfer form to the transferee for them to complete their section before returning the form to the company secretary.

6. Get the form stamped

The stock transfer form should be stamped by the HMRC, normally at the rate of £0.05p per pound of the value being transferred.

The transfer may be exempt if no money is being paid for the shares.

It is the purchaser of the shares that has to pay the Stamp Duty.

The address for paying Stamp Duty is:

Birmingham Stamp Office
Ninth floor
City Centre House
30 Union Street
Birmingham B2 4AR
Tel: 0845 603 0135

Find out more on transferring shares and paying Stamp Duty with our article Transferring shares in a limited company.

7. Note the transfer in the register of transfers

Once this has been completed, the company secretary should note the transfer in the register of transfers, issue the new share certificate in the name of the new owner and enter their details in the shareholders’ register.

8. Issue new shares

If the transferor is transferring only some of their shares, when you reach procedure 4. above, the company secretary will issue not one but two share certificates.

The company secretary will send one to the transferor for the balance of shares that they are retaining and one to the new holder for the shares they are acquiring.

9. Note the transfer in the next Annual Return

If the transferor is transferring their shares to more than one shareholder, separate transfer forms will be required and both will need to be stamped.

The transfer will need to be noted on the next Annual Return submitted to Companies House.

Further information

 

External information

Issuing shares and share certificates

Lawpack on March 27, 2020

Once you receive a Certificate of Incorporation from Companies House your limited company is incorporated and you, as limited company directors, are free to start issuing shares and share certificates.

To discuss and agree on how you are going to issue shares and share certificates you will need to hold a meeting of all the limited company directors (called a ‘board meeting’). All board meeting decisions must be recorded in writing (called ‘board minutes’). Or, alternatively, all the limited company directors can sign a written resolution.

Issuing shares

The limited company directors should allot and issue one share of £1 each to each of the subscribers to the Memorandum of Association. If you have more than one company director, a majority of the limited company directors must agree to issue shares at the board meeting.

When you’re issuing shares, you don’t need to notify the allotment of the subscriber shares to Companies House. Companies House must be notified within one month of the allotment of any further shares.

Notification of the issue of shares is given by completing and filing Form SH01. You should complete yours according to your own requirements.

A Register of Members should be completed by the company secretary or a company director (if you have no company secretary) to show the one or two subscribers as members of the company.

If the limited company is a single-member company, the Companies Act requires that a statement to this effect be made in the Register of Members.

This statement normally reads as follows: ‘In accordance with company legislation the company has become a one-member private limited company with effect from [insert date] with the sole member being [insert name and address of member].’

Article: Issuing shares: Q&As

Issuing share certificates

To provide the shareholders with a title document to their shares, you will need to issue share certificates at the first board meeting. Each share certificate must include the following:

  • A share certificate number
  • The number of limited company shares
  • The name of the limited company
  • The name of the holder
  • The address of the holder
  • The number and type of limited company shares issued to the holder
  • The nominal value of the limited company shares
  • A statement of the extent to which the limited company shares are paid up

If your limited company has a company seal, this can be stamped on the share certificate in the presence of either:

  • Two limited company directors; or
  • One director and the company secretary; or
  • One company director, if you have just one company director and no company secretary.

If you don’t have a limited company seal, the share certificate can merely be signed by:

  • Two limited company directors; or
  • One director and the company secretary; or
  • One company director, if you have just one company director and no company secretary.

The share certificate should be dated on issue.

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