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Share transfers - Coggle Diagram
Share transfers
Stamp duty
STF should be stamped by HMRC if liable to duty or adjudication prior to being lodged with the company for registration
Stamp duty is currently payable on transfers with a value of £1,000 or more at the rate of 0.5% of the consideration paid for the shares rounded up to the nearest £5
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If transfers or other documents are submitted for stamping late, interest and/or penalties may be payable
Where liable to stamp duty, an unstamped STF does not provide a valid transfer
It is there responsibility of the person registering the transfer in the register of members to ensure that it is properly stamped or correctly certified as exempt
Transfers of most shares traded on a growth market, such as AIM are exempt from stamp duty provided the shares are not also listed on a RIE
There are some exemptions form the requirement to pay stamp duty such as where shares are being transferred under a group reorganisation
Where a company with subsidiary companies transfer shares from one subsidiary company to another, it would not be appropriate for stamp duty to be paid on the full value of the shares transferred as the shares still remain within the same group of companies
Parent companies may take advantage of the provisions of the Finance Act1930 which allow them to apply to the stamp office to exempt the transfer of shares from stamp duty
Under the new electronic process payment of the duty should be made to HMRC ideally by bank transfer and quoting a reference comprising your name and the amount of the amount of duty being paid
A completed, signed (wet ink or electronic) and dated STF or other documents required to be stamped, such s form SH03 should be emailed to HMRC an quoting the payment reference so that the payment can be matched to the email notification. Once matched, HMRC will issue a letter confirming that the correct amount of stamp duty has been paid
Transfer checklist
The transferor should complete a STF giving details of the shares to be transferred, their own name and address as transferor and the name and address of transferee. The form should be signed by the transferor and where the shares are partly paid by the transferee
Prior to registration by the company, it will be necessary for the STF to be stamped by HMRC
The stamped STF together with the original share certificate should be forwarded to the company or its registrar for registration
Upon receipt of a STF the company should check that the details of the transferor are correct and that the share certificate is valid. If the original share certificate has been mislaid it will be necessary for the transferor to complete an indemnity in respect of this lost certificate
Many private companies have detailed pre-emption provisions on the transfer of shares and care must be taken to ensure that these are followed. Alternatively the pre-emption rights may be waived by the remaining members
The transfer of shares requires approval from the board of directors, who should also authorise the issue of a share certificate to the transferee and of any balancing certificate to the transferor. Companies with publicly traded shares will give their registrar uahtoirty to register transfers as it s simply not practical to authorise individual transfers
Details of the transfer must be entered in the register of members. Transfers must be processed or rejected within two months of receipt. Where rejected, the company must provide the details for the refusal that the transferee may reasonably request
STF
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Following registration the company will issue a new share certificate to the transferee in respect of the shares transferred as well as any balancing share certificate to the transferor if required
The overwhelming majority of transfers of shares for companies with shares admitted to any of the markets will be facilitated electronically using the CREST settlement system
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CREST
Companies whose shares have been admitted to CREST will be authorised to accept electronic instructions to effect the transfer of shares and these details will be entered by a CREST participate such as a stockbroker
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Where shares are transferred via CREST the duty in the form of stamp duty reserve tax is automatically collected and accounted directly with HMRC by CREST
Whether shares are admitted to trading on a public exchange or not, most shares are transferable although there is no automatic right to transfer ownership of shares in the Act and the authority will be set out in the company's Articles
Many private companies Articles contain pre-emption rights on transfer designated to ensure that the pool of issued shares is retained within a relatively small number of owners who are usually related to the company's founders
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The admission requirements of the public markets will require that there are no restrictions on the transfer of shares in order to facilitate the smooth operation of the markets