Power of Attorney: share transfer
Power of attorney for a transferring shareholder to appoint the transferee as its attorney pending registration of the share transfer.
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When do I use this document?
- in conjunction with a transfer of shares
- when stamp duty is payable on the share transfer
- to enable the transferee to vote and exercise other shareholder rights pending the registration of the share transfer
- if applicable, as a document delivered at completion of a Share Purchase Agreement
What are the key features?
- different forms of power of attorney, depending on whether the transferor is an individual or a company
- appointment of either an individual or a company as the attorney
- irrevocable appointment given by way of security
What else do I need to know?
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.
Until the stamping process is completed, the transferor will remain on the company’s register of members as the registered shareholder of the transferred shares. As the registered shareholder, the transferor is legally entitled to exercise the rights attached to the shares, including receiving notices of meetings, voting the shares and receiving dividends.
The transferee of shares may require the transferor to appoint the transferee as the transferor’s attorney in relation to the shares. This allows the transferee to exercise the share rights pending the transferee being registered as the holder of the transferred shares.
When do I use this document?
- for the novation of a contract or agreement
- for a new party to replace one of the original parties to the contract
- where the other original party to the contract consents to the novation
- for a contract governed by English law
What are the key features?
- 9 clauses over 3 pages
- agreement in the form of a Deed of Novation
- wording for replacement party to become party to the novated contract
- alternative wording depending on whether the replaced party will be discharged from:
- all liability under the contract from its commencement
- liability under the contract from the date of novation
- indemnity from the new party in favour of the replaced party for failure to perform the novated contract
What else do I need to know?
A novation agreement template is used where the original parties to the agreement have agreed that a new party should replace one of them and assume the obligations and liabilities of the replaced party.
Novation is an alternative to assignment – assignment of a contract can only apply to the benefit of a contract, which are the rights of a party under the contract. The burden of a contract (the party’s performance obligations) cannot be assigned under English law. If one party wants to transfer both the benefit and the burden of a contract, the contract will need to be novated.
Under a novation, the contract is effectively replaced with a new contact and the new party to the contract is treated as an original party to the contract in place of the departing party. Novation requires the consent of the remaining original party to the contract and is documented in a novation agreement or deed of novation between the three parties.
Under the novation agreement:
- the original parties to the agreement agree that the new party takes the place of one of the original parties
- the new party agrees to perform the obligations of the replaced party and the remaining party agrees to accept the new party’s undertaking to perform these obligations
- the new party can either agree to be liable for all the obligations of the replaced party from the start of the agreement or only for its own performance obligations from the date of novation
What other documents are available?
For a template contract assignment, see
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Updated by a lawyer on 01/08/2024
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