Shares in a private limited company are personal property and may be transferred in the manner laid down in the company’s Articles of Association. In the case of a private company the right to transfer shares in restricted usually in the form of pre-emption clauses or by conferring on the directors the power to refuse to register transfers (in some circumstances).
A transfer of shares can either take the form of a sale or gift. It may also be exchanged with another class of shares.
In the case where the shares are transferred by sale, a share purchase agreement would need to be drafted and signed in the presence of two witnesses provided that there are two persons signing the agreement.
Additionally, the transfer requires the payment of stamp duty if the company has properties, which is calculated as a percentage of the share value being transferred. The stamp duty is paid by the buyer or the seller, as agreed upon in the share purchase agreement.
The Board of Directors is required to approve the transfer of shares through a resolution.
Provided that the directors approve such a transfer, an Instrument of Transfer must be prepared which would be signed by the transferor and the transferee.
Such Instrument of Transfer is required to be submitted to the Registrar of Companies within 14 days from the signing of the document.
Once approved by the Registrar of Companies, a new shareholder’s certificate needs to be issued.
Finally, when the changes are approved by the Registrar of Companies, the register of members kept by the company/service provider must be updated.
IBCCS TAX can assist you from the beginning until the submission of any amendments to the shares of your company and order new shareholder’s certificate.
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