Share transfer approval
Directors of a company must, following receipt of a proper share transfer instrument, either register the transfer of shares or refuse to do so. Known as a share transfer approval.
Can directors refuse to register a share transfer?
Whether the directors are entitled to refuse a transfer will depend on the company’s Articles of Association and, if relevant, Shareholders Agreement.
How do the Model Articles regulate share transfers?
If the company has adopted, without amendment, the Model Articles applicable to private limited companies, the directors have a right to refuse to register a share transfer.
In addition, the Articles of Association and, if relevant, Shareholders Agreement may contain provisions which either restrict or regulate the transfer of shares. These will need to be checked prior to a share transfer being executed and delivered to the board of directors for approval.
About these Board minutes
These minutes are for a meeting of the board of directors at which the share transfer will be approved. They are on the basis that any provisions of the Articles of Association or Shareholders Agreement which either restrict or regulate the transfer of shares in the company have first been complied with. In order to approve the transfer, the board will require to be delivered to the directors:
- a stock transfer form signed by the transferring shareholder (the transferor) and, if the shares are not fully paid, the recipient of the transfer (the transferee)
- the original share certificate for the shares being transferred in the name of the transferor. This share certificate should have previously been issued by the company to the transferor shareholder and may also cover shares which the transferor is not transferring
- if the transferor has lost or destroyed the share certificate, an indemnity for lost share certificate in favour of the company, signed by the transferor
If any stamp duty is payable on the share transfer, the approval of the share transfer is subject to the delivery to the company of the stamped stock transfer form.
A transfer of shares may result in a change to the identity of shareholders who are registered on the company’s PSC Register. The board minutes provide for the transferor to cease to be a PSC, and for the transferee to become a PSC, in relation to the company and for the transferor and the transferee to notify the company in writing to this effect.
- Declaration of director’s interest (if applicable)
- Resolutions (subject to payment of stamp duty)
- to approve share transfer
- to authorise new share certificate(s)
- to update PSC Register
- to make Companies House filings
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