The shares of a company are considered as a type of property. And, as stated in Companies Act 2006, as a type of property, the owners can choose to sell or transfer them to new owners. In order to legally transfer stocks from person to person, a Stock transfer form from Companies House is used.
Reasons for share transfers
There are many possible reasons to transfer shares. The reasons include the following: • The business is in need of more investment; • There is a new business partner that has joined the board; • A person who owns shares wants to leave the business and would like to get his investment back; • A shareholder die; • A director of a company who also has shares resigns or retires or has been removed from his position in the company; • The shares are transferred to an ISA or a pension that is more tax efficient; • Shares are given as a gift to a spouse or to a member of the family as a strategy that would be tax-efficient; • The owner of the business is retiring and it is his/her wish to transfer the business to his/her children or he/she may also want to sell the business to another person.
Transferring of ownership of shares
To be able to transfer the ownership of shares legally, a stock transform form should be filled out. Companies House may not be notified during this time. Any changes though will have to be reported during the next confirmation statement which is sent in annually. However, it is wise to file a confirmation statement as soon as possible after submitting your stock transfer form. It is important to understand a company’s articles of association because one can find there the stipulations regarding shares. There are some companies that only allow shares to be sold or gifted to existing members, employees, or family holders. It is important to understand how shares are managed in a company.
The Stock Transfer form
A Share transfer form Companies House has should be filled to complete the share transfer. The information required on the form include the following: • The company name; • The company registration number; • The number of shares that are going to be sold or gifted; • The class of the shares that are going to be sold or gifted; • The name of the transferor (the current shareholder); • The address of the transferor (the current shareholder); • The name of the transferee (the new shareholder); • The contact address of the transferee (the new shareholder); • The amount of each unit that has been paid or has not been paid; • Any details of non-cash payment if applicable; • The authorized signature of the company director; • The stamp duty liability if applicable;
Other important details
When the value of sale of all the shares goes over £1000, the transferee will be the one liable for paying the stamp duty which should be 0.5%. HMRC would work on the form submitted for around 5 to 10 business days. Another 5 working days would be needed to get the form back which would be sent via post. When stamp duty has already been paid and the form has been received already by the one who filed it, the form should be sent to the company’s registrar. This usually is the company director. It should be sent with the certificate of the shares which has to be cancelled. A new certificate of shares would then be issued by the registrar. Companies House should also be informed in case there are changes in the share structure of a business which is outside the annual return. It should be reported to Companies House in a month if there are more shares issued in the company. To change the share structure, a special resolution would be needed and this is if these happen: • The number of company shares have been changed as well as the total value. • The way how the shares are distributed have been changed. • Any of the shares have been cancelled. • The shares are changed to other currencies
The form for transferring shares should be completed and all necessary documents should be included to make the process go faster. By filing it correctly, HMRC can easily process it and it would not be rejected.
published under Business Address Guides
