Articles of Association: established business multiple investors

When do I use this document?

• as a document to be delivered by a seller at closing of a Share Purchase Agreement
• when stamp duty is payable on the share transfer
• to enable the buyer to vote and exercise other share rights pending the registration of the share transfer

What are the key features?

• • suitable for an individual or corporate seller
  • appointment of the buyer as the seller’s attorney
  • grant of authority to the buyer to exercise all rights as the legal owner of the sale shares
  • irrevocable appointment given by way of security

What else do I need to know?

Following the closing of a share sale transaction, the seller will remain the registered owner of the shares which have been sold until the buyer has paid the necessary stamp duty.  This process can take a number of weeks.  The transfer of the sale shares cannot be registered in the register of members of the target company until the stamp duty has been paid.  

The buyer will want to be able to exercise all the rights as the owner of the sale shares notwithstanding that the seller remains the registered legal owner of the sale shares.  To enable the buyer to do this, the buyer will usually require that the seller grants a power of attorney in favour of the buyer which enables the buyer to exercise the legal rights of ownership of the sale shares.

If a share transfer involves consideration exceeding £1,000, stamp duty will be payable to HMRC and HMRC will need to confirm that the stamp duty has been paid.  This stamping process typically takes a few weeks and involves payment of the stamp duty and submission of the stock transfer by email to HMRC for HMRC to confirm the payment.