Share Transfer Procedure

I am a shareholder and director of a close limited company. There are four shareholders, each owning a 25% share in the company. One of the shareholders wishes to pursue other ventures and wishes to transfer his share holding equally among the remaining 3 shareholders. Could you please explain the process and any tax implications?  

1st February 2011

The first thing you must do is check the company's articles of association to ensure that a share transfer of this type is allowed. When Table A model articles have been adopted, share transfers are permitted.

An ordinary resolution must be passed by the board of directors either at a general meeting or by written resolution. 

The stock transfer form J10 should be filled in and sent to HM Revenue & Customs for 'stamping' if the consideration for the transferred shares is over £1,000. If the consideration is over £1,000 stamp duty will be payable to HM Revenue & Customs at a rate of 0.5%.

A share certificate should be issued to the new shareholder(s) stating the company name, location of registered office, company registration number, shareholders name, share holding details and signatures.

The company's internal books and registers should be updated and Companies House must be informed of the transfer on the next annual return.

By Jo Nockels

Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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