There may be times when you want to change the share structure of your company; either by adding a new shareholder or by changing the existing proportion of shares between shareholders. A share transfer is the process of transferring existing shares from one person to another; either by sale or gift.
This article will cover how to transfer existing shares within your company, a guide for allotting shares can be found here. If you are unsure whether transferring or allotting shares would be a better option for your company, please contact your account manager.)
Transferring shares
Shares can be transferred from a shareholder to another person (either a new or existing shareholder). Shares are transferred by way of gift or sale. Typically, shares are transferred to introduce a new shareholder.
So long as a company has enough shares, it’s possible to transfer shares in a limited company any time after incorporation.
Before you take any action on changing your share structure within your company contact your Account Manager so we can understand and advise on your plans.
The process
Any transfer of shares needs to be formally actioned by you as the director. You will need to complete the following steps:
Confirm your shareholdings
If you’re a client of inniAccounts, your first port of call should be to inform your account manager of your plans; we’ll then be able to guide you through the process and update our software to reflect any changes.
When it comes to updating Companies House, we will take care of this for you if you have our company secretarial service. If it’s not included in your package, ask your account manager about our current fee or about adding our Company Secretarial Service to your package.
Before you transfer any shares, you need to confirm your current shareholdings, the number of shares you wish to transfer and the resulting share structure of your shareholders. If you are transferring shares to a new shareholder you will also need to confirm their name, date of birth, nationality, residential address, proof of ID and relationship to the other shareholders in your company.
In some cases, you may have insufficient shares in your company to allow your intended transfer. This would mean that you need to allot new shares. If you are unsure about the number of shares in your company, please contact your account manager.
Hold a board meeting
The share transfer must be approved through a board agreement. A board meeting should be held to review the stock transfer form and agree the transfer. Be sure to keep detailed minutes of your meeting that clearly display the revised share structure and share holdings. These minutes will need to be kept safe with your company records, they’ll later be used when updating Companies House and also provide a solid audit trail. If you’re an inniAccounts client, we’ll send you a template for the minutes of your meeting.
Complete a stock transfer form
A stock transfer form (or J30 form) is a standard document that can be used to transfer existing shares. It contains details of the seller (or gifter) of the shares and the receiver, the type and number of shares being transferred as well as any consideration that has been paid for the shares. As director, you need to complete these details before signing and dating the form. It’s standard practice to complete a stock transfer form in black ink and BLOCK CAPITALS. This form will need to be stored with your company records. If you’re an inniAccounts client, we’ll send you a template of the stock transfer form.
Issue new share certificates
Having agreed your share structure, you will need to issue new share certificates detailing the shareholdings – these will render any previous share certificates as effectively cancelled. If you are an inniAccounts client, we will send you a template share certificate to be signed and dated.
Update your company’s confirmation statement (CS01) with the new share totals
You now need to update your company’s confirmation statement, with Companies House, to show the new share structure within your company. If you transferred shares to a new shareholder, you need to include their details in your confirmation statement.
If a shareholder has over a 25% holding in the company, you will need to add them to the PSC register as part of your confirmation statement.
You can find a step by step guide for completing a confirmation statement here.
Should you have any issues with completing this process, we’re happy to help. Simply contact your account manager.
I bought £50k of Glanmore property fund units in 2006. In 2007 my Financial advisor had me sign a stock transfer of these to a Lombard offshore Bond ( i was non uk Resident). In 2016 i was disposing of the Lombard Bond and was given a stock transfer form to return the Glanmore units to my name. In march 2017 i recieved a liquidation payment for the full original number ( including some reinvested dividend units) of my Glanmore shares. The loss from 2006 to 2017 was £48k. Can i claim this as a capital loss from HMRC. In spite of the stock transfers i believe i have been the sole beneficial owner throughout the period.
As your financial advisor helped to manage the funds it would be advisable to verify with them any tax implications of the fund.
How many days prior to the date in the contract shall an employer of a start up start be having a conversation about shares transfers with the employee when the contract of employment states: on or around the last working date of the 6 months from the commencement date. If they are not eligible and the employer has established it now well before the last working date of the 6 months should employer tell the employee now?
As employee share schemes can be a complicated area and any terms of contracts are a legal matter it would be advisable to seek legal council on this.
Hello,
I’m the co-founder of a UK registered Limited company.
At the moment I’m completing a J10 Stock Transfer Form. I’m transferring shares with a value of less than a £1000 for NIL. So I do not need to send anything to HMRC right? However, besides updating the confirmation statement, do I need to send anything to companies house?
Also, if I fill in the form myself. Do I need to fill in the box on the form stating ”lodged by”
Regards,
Koen
Hi Keon
When completing share transfers it is best to speak to a tax advisor/solicitor specialising in this area to ensure you remain compliant. Even if the nominal value of the shares is less than £1,000 the actual value of the shares could be considerably higher due to the value of the business at the time of transfer.
There are also further tax implications depending on who the shares are being transferred to, the receiving individual could have a potential income tax exposure.
When helping our clients set up and maintain their limited companies we consider optimal share structure and compliance for tax efficiency so our clients get off on the right foot.
My ex-partner turned a profitable business into a failed one over the period of our split and set up an identical company in order to retain all profits. I am a shareholder of the first company and am being asked to transfer the shares to him on the basis that the business is no longer profitable. I have been advised that there are a number of issues around this that I should consider before transferring – the value of the company, the fact that he may be able to use the loss against profit in the new company, the tax liability. What is your advice on the best way forward?
Hi Susan,
Due to the potential complex nature surrounding your issue, I would recommend that you speak with someone who specialises in company valuations and seek legal advice before proceeding to transfer the shares to your ex-partner.