Limited company shares can be transferred or sold to other people, just like any other form of property. Share transfers, therefore, are very common and may take place for any number of reasons, including:
- the retirement or death of a shareholder
- recouping an investment
- gifting shares to family members
- raising additional capital
- bringing in a new business partner
To legally sell or transfer ownership of shares, a Stock Transfer Form must be completed. There is no need to notify Companies House at the time of any transfer – you simply need to report the changes on the next annual confirmation statement.
However, it is considered best practice to file a confirmation statement as soon as possible after any share transfers. You may also need to notify HMRC if any Stamp Duty is due.
In some companies, the articles of association may stipulate that shares can only be sold and given to current members, company employees, or family members of existing shareholders. The articles may also express the company’s right to buy back any shares when they become available.
If you have a shareholders agreement, it may include certain conditions on share transfers, so it is important to check these documents beforehand.
How to complete a Stock Transfer Form
To complete a Stock Transfer Form, you will need to include the following details:
- Company name and registration number
- Number and class (type) of shares being transferred
- Amount paid or due to be paid for the shares, if applicable
- Details of any non-cash payments, if applicable
- Name and address of the existing owner (the ‘transferor’)
- Name and address of the new owner (the ‘transferee’)
- Authorising signature of both parties
- Declaration of Stamp Duty liability, if any
Both the transferor and transferee should be given a copy of the Stock Transfer Form. A share certificate must also be issued to the new shareholder.
The company should retain copies of all Share Transfer Forms and share certificates at its registered office address (or SAIL address, if applicable).
Directors are also responsible for updating certain statutory company registers as soon as possible, including the register of members and the register of People with Significant Control (PSC register).
Stamp Duty on shares
Stamp Duty is payable when company shares are transferred for more than £1,000. In such instances, the new shareholder must pay Stamp Duty tax to HMRC at a rate of 0.5% of the sale value. There is no Stamp Duty to pay on any share transfers below £1,000, or when shares are transferred as a gift.
Restrictions on the transfer of shares
Before selling or gifting shares, you must check the articles of association and shareholders’ agreement (if applicable) for any restrictions, such as:
- Pre-emption rights of existing shareholders
- The directors’ power to authorise share transfers
- Buy-back options of the company
However, shareholders do have the authority to amend the articles and shareholders’ agreement to include, remove, or change restrictions on share transfers. To do so, a special resolution must be passed.
Pre-emption rights
Pre-emption rights are provisions that protect members’ rights and prevent the unfair dilution of their shares. Share dilution happens as a direct result of new shares being issued and purchased by outside investors. Consequently, the existing shareholders’ proportional ownership of the company is reduced, which has a negative impact on their level of control and profit entitlement.
When pre-emption rights are in place, available shares must be offered to existing members first (i.e. before they can be offered to non-members). The percentage of shares offered to each member should be in relation to their current percentage of ownership, thus enabling them to maintain their existing level of shareholdings and prevent the potentially harmful influence of outside investors.
Directors’ powers
Directors are appointed to make decisions on behalf, and for the benefit, of shareholders. Many companies allow their directors to authorise share transfers, whilst others only prescribe this authority to shareholders. It is entirely up to the members of a company to decide which powers are granted to directors.
If a director does not have the power to authorise share transfers, the members must:
- pass a resolution to authorise the transfer, or
- grant the necessary powers to the director on that particular occasion
How to notify Companies House about share transfers
There is no need to notify Companies House about share transfers until you file your next Confirmation Statement. Changes to shareholders should be updated at the same time. When Companies House has been notified, the new information will be updated on the public register.
Alternatively, you can update your Confirmation Statement early if you wish to report the changes immediately. This is recommended if you’re setting up a business bank account, applying for a loan, or entering into any other type of contract or agreement with third parties.
Can you transfer shares from a Limited company to a Group company for nil value ?
Thank you for your comment, Luiza. Yes, we don’t see why not! Although please always check your articles of association first, for any restrictions.
Kind regards,
The Rapid Formations Team
Hi Rachel,
I am checking a company’s person of significant control information on company house website. As I can see a persion A sho used to have more than 75% shares in a ltd company, she is the director, and from a confirmation statement on August 2021 I can see she just transfered all her shares to another person B. However when I checked this company’s person of significant control on company house on October 2021 I can only see A is still holding 75% shares and B’s name is not showing up. Can I ask if this can be a fake transfer or if not how come B’s name doesn’t show up on person of significant control page on company house?
Thank you for your message, Halu.
Whilst we can’t advise on specific cases, I have provided some guidance below that should hopefully help clarify your situation.
In the first instance, a transfer of shares’ validity would generally be subject to the provisions of the Companies Act 2006, the company’s articles of association, and any other agreements that are in place being met. In practice, this usually means that an instrument of transfer (an appropriately signed stock transfer form) needs to be submitted to the company, the directors need to have accepted the transfer form (usually by way of board resolution or at a meeting which is then recorded using a set of minutes), and finally that the company’s register of shareholders has been updated to include the new shareholder information.
Whilst a transfer of shares doesn’t usually have to be registered at Companies House immediately, it does need to be reported on the company’s next confirmation statement, thereby confirming the company’s shareholders’ position. A company must file at least one confirmation statement every 12 months.
However, it’s important to note here that the company’s People with Significant Control (PSC) information is dictated by separate legislation, introduced first by The Small Business, Enterprise, and Employment Act 2015. This Act sets out the rules upon which companies must report their beneficial owners (the “People with Significant Control”). All changes to a company’s PSC information must be reported to Companies House within 28 days from the date that the change in PSC took effect. Failure to update the relevant PSC information is a criminal offence. It’s possible that, if the dates align properly, that this 28 day deadline has not yet passed and this may be why updated information has not yet been submitted (having said that, companies are required to update their PSC information to ensure it is correct before submitting a confirmation).
It is also possible that the PSC information simply has not yet been updated (i.e. that it is late). Whilst shareholder information and PSC information are often closely linked, updating one of these components does not automatically update the other. The company must consciously submit separate both pieces of information to Companies House – there are dedicated PSC forms that would be used for the PSC information, and the confirmation statement is used to report the shareholder information).
Finally, I would note that it is not out of the question that all shares have now changed hands to the new shareholder (shareholder “B”), but that the original person (shareholder “A”) may still be the ultimate beneficial owner of the shares, and thus registrable as a PSC. It’s not a very common scenario, and it is not something that you would necessarily be able to conclude from the PSC information registered at Companies House.
In sum, although the confirmation statement has been submitted showing all shares have transferred, that the PSC information on registered on Companies House has not yet been updated would not in itself usually preclude the transfer from being declared invalid. It’s important that PSC information is filed as soon as possible with Companies House.
We trust this information is of use to you.
Regards,
The Rapid Formations Team
Hi Rachel Craig,
I have a limited company 50% shares and my partner has 50% shares. She now has no interest in the company and wants to transfer her 50% shares for free to me. How can this be done and given that she is not selling her shares to me but gifting them to me for free, do we need to pay Stamp Duty or inform HMRC?
BTW – What form do we need to fill in and is there supporting help file to help us fill this in?
Thanks
Abi
Thank you for your kind enquiry, Abi.
In general terms, whether Stamp Duty is due is dependent on the payment amount for the shares being transferred.
Shares in excess of £1,000, incur a tax or duty of 0.5% on the transaction, which will be rounded up to the nearest £5.00. If you buy shares using a stock transfer form, the form requires to be sent to HMRC for stamping, with stamp duty paid no later than 30 days after the date of the transfer.
Example – If you buy shares worth £1050, you’ll pay 0.5% on this amount which is £5.25. Therefore the amount of £10 is payable in Stamp Duty.
Our Customer Service Team will send you an email to explain the Transfer of Shares service we offer in more detail. Alternatively, please take a look at our Transfer of Shares Service here: https://www.rapidformations.co.uk/transfer-of-shares/
Regards,
The Rapid Formations Team
Hi,
I currently hold around 10% shares of a private limited company. Due to an increase in my performance and responsibilities the other 3 shareholders intend to each transfer me an equal number of shares to increase my holding to ~15%. Is it just the stamp duty fee I would have to pay or are there any other tax implications?
Thanks, Tim
Thank you for your kind enquiry, Tim.
In general terms, with respect to the actual transaction, Stamp Duty is usually the key consideration for the transferee (purchaser). Stamp Duty is usually payable on transfers north of £1,000, and the Instrument of Transfer will need to be stamped by HMRC themselves. More generally, we would recommend seeking accounting advice on specific transfers, as it can vary on a case by case basis.
I trust this information is of use to you. If you have any further questions, please do not hesitate to leave a further comment.
Kind regards,
Rachel
if you could help me out would mean a lot !
i invested £30,000 into a gym for it to refurbished and in return the owner will give me 40% shares in the business. 4 months past and his response was that the business is bankrupt and i have lost all my money ! with no proof at all with what he done with the money ect. its obvious he has scammed me but how do i get my money back ? we went to a notary and we both signed a Share purchase agreement and the shareholders agreement but by reading this blog i never done a stock transfer form. does this mean he sold stocks illegally or is it the same thing instead of a stock transfer form . can i get my money back from this?
Thank you for your kind enquiry, Adrian.
In general terms – in order for a transfer of shares to be effective, an ‘Instrument of Transfer’ must be completed and the transfer must be approved by the board in accordance with any provisions with the company’s articles of association and shareholder agreements, etc.
A transfer is usually deemed as ‘completed’ when it is entered onto the Register of Members for the company.
If you are not confident that either of the above has taken place, we would suggest seeking legal advice.
I trust the above information is of use to you. Should you have any follow up questions, please do not hesitate to leave another comment.
Regards,
Rachel
Hi, awhile ago a family member died and left inheritance in form of stock shares. Another family member is in control of the estate. I recently met the requirements for receiving them. How long in the uk does it take for them to be signed over, and what is the process it would go through?
Thank you for your kind question, Liam.
In general terms, if it is a simple share transfer from the deceased person to yourself (via the executor), it will become effective from the date of the signature on the stock transfer form.
However, depending on any other documents (e.g. the will, the articles of association, the shareholder’s agreement etc.), this may delay your ability to obtain a signed stock transfer form from the executor.
We would recommend that if you require further clarification or a swift transfer of shares to yourself, that you seek professional legal advice.
I hope this has been of help to you.
Kind regards,
Rachel
Hello Rachel
I am selling my Flat and I have the share of the Freehold with another 16 Flats. I have been requested to sign the Stock Transfer Form in lieu of passing my Ordinary Share of £1 to the buyer. I would like to know if I need to answer any questions on the back page of the form in regard to the Certificate 1 or Certificate 2 which talks about Stamp Duty – Not sure if the my Management Company has to sign this. I have signed on the front page that I am transferring my share to the Buyer but not sure if I need to do anything else on the back page as described above.
Thank you, Tony
Hi Tony,
The person who is selling the shares should sign Certificate 1 or Certificate 2 (whichever is applicable) on the Stock Transfer Form – in this case that person would be yourself. Doing so certifies that no stamp duty is payable on the transfer.
Best regards,
Rapid Formations
How to transfer shares from a person to limited company?
What to write in share transfer form in the section transferee?
Does the share sale agreement have to be confirmed by a notary public and should it also be sent to the shareholder’s register to make the entry of the new shareholder?
Dear Chris,
The name and residential address of the transferee (the person who is receiving the shares) should be entered into the transferee section of the Stock Transfer Form.
Regarding the share sale agreement – this does not generally have to be notarised unless you have been asked to arrange this or require it for a different purpose. You will need to present the share sale agreement to the company for them to enter the transfer into the company’s register of members.
Rachel at Rapid Formations
hello. On the same subject – if the existing shareholding is £100 divided between the MD and the Sec, and we issue 1000 ordinary non voting shares, does this mean that the current directors will get 100 shares of the dividends and the non voting shareholders will get 1000? If you see what I mean?
We want to raise capital but do not want to lose control of the company, we think by issuing non voting shares we could achieve this but we wouldn’t want to work for nothing!!
Hi Barry,
So you want to create 1000 new shares, all of which will be non-voting? What about divided rights? If you issue an additional 1000 shares to other people, you’re existing shareholdings will be diluted significantly and you will not be entitled to the same percentage of the profit. But you will still have the same control of the company if your 100 shares are the only ones with voting rights.
I would advise speaking to an accountant before doing anything because I’m not entirely clear about the situation to be able to help properly!
Best wishes,
Rachel
Hi,
I’d like to quit the company as a shareholder due to a massive fallout with other owners (over non payment of my salaries) but they refuse to buy the shares from me to keep me in the company. The shares only have a nominal value of a few pounds. What can I do?
Thanks a lot for your answer.
Anna
Hi Anna,
I’m really not sure what you can do in this situation. I presume you are a minority shareholder? I would advise speaking to an accountant or solicitor for specialist advice.
Sorry I cannot be of help to you.
Best wishes,
Rachel Craig
I live in NZ & have 270 Lloyds Banking Group plc shares which I would like to transfer to my sister in Scotland.
What form do I use or how do I do that.
what is the cost.
Thank you
Annie Barr
Hi Annie,
Thanks for getting in touch with this query. Please contact our CoSec expert, Agne Rimkute, who will be happy to advise on this matter: agne@rapidformations.co.uk
Best wishes,
Rachel
My wife lent our daughter some money a few years ago which she wants to repay now, but with shares she has in a US company brought through his share option plan. My wife wants to keep the shares as longer term investment.
How does my daughter go about transferring the shares (~$7,000) into my wifes name?
Hi Stephen,
I’m afraid I cannot advise on the transfer of US shares. You will need to consult an accountant or solicitor for guidance on the legalities and requirements of this procedure. Best of luck.
Kind regards,
Rachel
Hi. My father has a small amount of shares in a football club and wishes to transfer them to me. Does this process still apply and does it matter that no cash will change hands as they are a gift? Many thanks. Matt.
Hi Matt,
Yes, your father will have to complete the stock transfer form to transfer the shares to you, regardless of there not being any payment exchange. I’m sure he has already done this, but please ensure he consults a director before transferring the shares – transfers must be approved by the company director in accordance with the rules and regulations outlined in the articles.
I hope this helps.
Best wishes,
Rachel
Hi,
I have purchased shares from x person. But as per the new guidelines we need to submit documents of trasferor and transferee’s. But the person x isn’t willing to provide me with his documents. What should I do now?
Thanks,
Hello,
Sorry to hear you are having a difficult time with your share transfer.
What guidelines in particular are you referring to, and what documents do you require from the transferor – is it the submission of the stock transfer form to HMRC with regards 0.5% stamp duty?
Best,
Rachel
thanks for supplying the STOCK Transfer Form template. IT is much appreciated…
You’re welcome, Chris!
Hi
If you transfer limited company shares to an adult child (who also has a shareholding at present), other than the 0.5% stamp duty are there any other potential tax liabilities (IHT / CGT consequences) to myself or the purchaser? (The company holds property).
Thanks
Dorpal
Hi Dorpal,
I’m afraid I am unable to answer that question – you will need to consult an accountant to discuss the particulars of the shares you wish to transfer and whether any tax implications are likely to arise.
Best wishes,
Rachel Craig
Hi, i have recently sold my shares in a limited company for 20k, i paid 3k for them, at the time of buying them i was an employee.
Does this qualify as an employee share scheme and hence can i take it has my tax limit on this is 50k?
thanks
Hi Mike,
I’m sorry but I am unable to answer that question – you will have to speak to an accountant.
Best wishes,
Rachel
If you a bought out of your shares for say £10,000, how long does the share buyer have to settle the funds of £10,000 (minus stamp duty.) thanks in advance
Hi Mat,
It’s up to the person selling the shares – as with any type of sale, the current shareholder will want to receive the money before handing over their shares in the company. This is always advisable. I would recommend speaking to an accountant or professional advisor before buying or selling shares for such a large amount of money. And a professional valuation is also advisable.
I hope this helps.
Rachel
Hi Debra,
What happens if you own 50% shares in a LTD company and the transaction shows in the annual returns however the following 7 years show no record of you having these shares and they appear as shares for the original holders
Hi Helen,
I’m sorry, I don’t quite understand what you mean. Where does it state that the shares are still owned by the original shareholders? If you are referring to the memorandum, that is normal. The information on the memorandum doesn’t’ change after incorporation, even when shares are sold and shareholders come and go – it is just a historical document that shows the details of the first shareholders and issued shares.
If you have not sold your shares, you still own them. Do you have share certificates and are you listed in the statutory register of members as holding 50% of the company’s issued shares? This register should be at the registered office address and you are entitled to inspect it at any time you wish.
Rachel
HI,
Kindly advice how to transfer shares from demate account of intregated service to zerodha demate account. Thanks
Dear Musharraf,
We are not accountants so I’m afraid we cannot advise on this matter.
Kind regards,
Rachel
Can you see how much stamp duty an individual has paid for the transfer of shares within a limited company and/or can you find out how much the consideration was for the transfer?
Hi Debra,
Stock transfer forms are not a matter of public record and do not have to be filed at Companies House, so you will not be able to view details of the amount paid for the shares or whether any stamp duty was paid.
Best wishes.
I have a company and I want to issue non voting ordinary shares how do I create these shares and then issue them to the people?
Hi Nigel,
You can create non-voting shares by issuing additional shares without the right to vote – they will only carry the right to receive a share of profits as dividends. To do this, you will have to complete a Return of Allotment of Shares and stipulate the rights attached to the new shares in the prescribed particulars. The allotment will have to be approved by the existing shareholders or directors (it depends what it says in your articles of association regarding the issue of new shares).
Before doing this, I would strongly suggest speaking to an accountant for specialist advice.
I hope this helps.
How to sale and to whom shares can be sale or purchase in private limited company
Good morning,
We are just setting up a new Whisky distillery on the edge of Dartmoor in Devon. We are purchasing the large building and distillation equipment with own own funds and refurbishing the whole building also. We will however need working capital as we will not have Whisky for three years as it needs to mature but we still need to produce the Whisky every week at an expensive cost.
We would like to know if we can create shares and sell off approx 15% of the company and how we go about this please.
We have people that want to buy the shares already but very unsure how we go about this and don’t want to trip up legally.for example are we allowed to approach our Facebook page etc for shareholders as I am often contacted from there to ask if any would be available. Is this something your company could help us with?
Kind regards
Greg Millar
Dartmoor Whisky Distillery Ltd
Dear Greg
Thank you for your message.
There are no restrictions to whom shares in a company can be sold however the way to structure this process would require the help of an accountant or legal professional.
Kind Regards
Hi.Just wanted to ask that we have private limited company in which myself and my father are directors.My father has major share .Now he wants to transfer his 90 percent share on my name .Can you please guide the procedure .Thanks
Hi Sameer, to transfer these shares you should complete a stock transfer form. Both parties should sign this form with the information detailed in the blog above. Both yourself and your father should retain a copy and new share certificates should be issued. You will then notify Companies House of the transfer only in your next annual return.