FAQ - Share Transfer Agreement

Share Transfer Agreement – FAQ

Tosin Entrepreneurship, Founder's Post, Legal Advice, Legal Documents, Small Business, Startup Advice & Tips, Uncategorized

Shares can be transferred at any time and you need to know how the situation will be handle. Here are the essential for those seeking legal answers on Share Transfer Agreement.

How to Transfer A Share:

A transfer of shares, also known as a stock transfer, is the process of changing ownership of shares from one shareholder to another in a private limited company.

What is a Share Transfer Agreement, a Share Purchase Agreement and Stock Transfer Form?

Each of these are different ways to refer to the changing of ownership of shares

How to complete Stock Transfer Form:

A completed Stock Transfer Form includes:

    • Company details
    • Consideration (what is being given in exchange for the shares)
    • Share type and value
    • Current shareholders
    • Future shareholders
    • Stamp duty declaration (if needed)
Why to Never Use a Template:

Templates are far too general to do any real good in your business. All of your documents should be tailored made to fit your exact needs. Your legal work should be no exception to this necessity. Another reason templates should be avoided:  you never know who drafted it. Not knowing where your legal documents are coming from is a major concern. They can be full of mistakes and inaccuracies.

What is a Share Transfer Fee?

A stamp duty tax is owed if the transfer of shares involves a transfer of money or value.

  • If the value is less than £1,000, you will need to complete an exemption certificate, but you don’t have to notify HMRC about the transaction.
  • If the value is more than £1,000, you will have to send off your Stock Transfer Form to HMRC within 30 days of the effective date of transfer for the form to be stamped.
Calculating Share Transfer Stamp Value

When the value is more than £1,000, you are required to pay stamp duty tax at 0.5%, rounded up to the nearest £5 on each document to be stamped. That means that if the value of transfer is £1,990, your stamp duty will be £1,785 x 0.5% = £8.92. Rounded up means that you will have to pay £10 in this case.

When is Share Transfer effective?

When the documents are received, the company must cancel the old share certificate and update its register of shareholders. A new transfer certificate is then to be issued to the transferee within two months of the transfer. An issue of shares only becomes binding on a new shareholder when the company notifies them with this stock certificate.

If you’re unsure about the legal advice that you or your startup require, we offer a Free Legal Session We’ll talk you through your needs and answer the questions you may have. Book a session here.

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