How Does a Company Transfer Shares?
If a shareholder wishes to sell or transfer his shares, he should present to the company the share certificates for the shares being transferred together with a completed, stamped stock transfer form. Upon receipt, the following issues will need to be addressed:
Stock Transfer Form
You should ensure that the standard stock transfer form has been sent by the transferor showing the number and type of shares, the price and the name of the transferee. You should also confirm that the form has been signed by the transferor and that the stamp duty payable on the transfer of shares has been paid.
You should check whether there are any restrictions on the transfer of shares in the Company's Articles of Association.
Most standard printed share certificates incorporate a counterfoil system enabling a record to be kept of the certificates which have been completed and issued. When you have registered the transfer of shares, the old share certificate should be cancelled and a new share certificate must be issued to the transferee. Where the transferring shareholder still holds other shares, a fresh share certificate must be issued to him covering his remaining shares (known as a balancing certificate). Cancelled share certificates should be kept with the register of members for a reasonable period.
Shares transferred as a gift do not attract stamp duty and certain transfers of shares made in connection with a trust may only require to be stamped at the fixed rate of 50p. Stamp Duty is payable at 0.5 per cent rate and the duty is rounded up to the nearest £5. An example of this would be if the ‘consideration’ (what you pay for the shares – in money or kind) is £1,050, the Stamp Duty payable will be £10. If the consideration for the shares is £1,000 or less, you would not however have to pay any Stamp Duty. HMRC’s website has more information on stamp duty as well as an online calculator for working out the amount of stamp duty payable.
A share transfer does not need to be notified to Companies House, but the annual return must contain a list of shareholders at the time the annual return is filed and will show transfers of shares during the year to which it relates. The company’s register of members will also need to be updated. This will usually be done by the company secretary.