Part 2: How to Transfer your Company Shares

In part 1 of our company shares transfer guide we looked at the first half of the transfer process, including how to complete the share form and the payment of any stamp duty to HM Revenue & Customs.

In part 2, we will look at steps four and five of the company share transfer procedure, in more detail. This will show when the company becomes really involved, checking and approving the transfer documents.

4. Company receives and checks the transfer documents

Once the share transfer form is correctly completed and stamped, the form and the original share certificate should be forwarded to the company for registration.

The company will then perform a number of checks, for the following:

  • Transferor’s details on the share transfer form match those in the Register of Members
  • Number and type of shares on the share transfer form match those the transferor holds
  • Unpaid or partly paid shares have the correct form J10 completed and the transferee has signed to accept liability
  • Original share certificate presented is officially acceptable, supporting company records
  • The rights an individual has signing for the transfer IF they are not the shareholder displayed in the Register of Members

The individual in charge of keeping up the company’s Register of Members is responsible under the Companies Act 2006 for guaranteeing that all accepted transfers for registration are correctly certified.

For more information about the Register of Members click here.

5. Board of directors decide whether to approve the transfer

For most exchanges, the company’s board of directors accept transfer shares (unless a company officer has authorisation). However, there are a number of reasons leading to a transfer reject, this includes:

  • Transfer documented incorrectly, e.g. wrong share transfer form
  • Transferee has not accepted liability for unpaid or partly paid shares
  • Share transfers have been suspended e.g. during a close period
  • Appropriate procedure has not been followed related to the Articles of Association share rights
  • Company has lien of the shares (a right to keep possession until debt owed is discharged)
  • Attempted transfer is in excess of one class of share or in excess of a certain number of joint beneficiaries (four common limit)
  • Transferring shareholder has failed to return share certificate
  • Transfer is to a child, person of unsound mind, a bankrupt or other entity that is not a corporate body ready to hold shares

A proposed share transfer must be processed or rejected within two months of receipt, any rejected transfers should also provide explanations for refusal.

The next part will showcase the final steps of the share transfer process, when the shares are successfully transferred.

Part 1: How to Transfer your Company Shares (includes free downloads of the share transfer forms).

For any assistance contact Companies999, we will be happy to help you!

Part 3: How to Transfer your Company Shares

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