Issue or transfer of shares
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I wasn’t sure how to handle a share transfer between directors, but Mint Formations took care of everything efficiently. Great service and clear communication from start to finish.
Horizon Care Solutions Ltd
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We recently issued shares to a new investor and had no clue about the legal formalities. Mint guided us clearly, explained what was needed, and ensured the filings were accurate.
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I used Mint Formations to restructure my company’s shareholding. They were responsive, knowledgeable, and made the process completely stress-free. Worth every penny.
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What is the issue or transfer of shares?
There are lots of work-related, tax, investment, or personal reasons why someone might need to transfer their stake in a business. The beauty of forming a limited company is that business ownership is represented by handy, identifiable units (i.e., shares). There’s also a standard, well-established procedure in place for the transfer of shares, which means less hassle, clear protections for stakeholders, and the ability to shape your company in response to changing circumstances.
The process for the transfer of shares is designed to be straightforward. There are, however, certain important checks and notifications involving Companies House and HMRC that you need to be aware of and follow.
Understanding share transfers
A share transfer is where ownership of shares in a limited company is transferred from one person or entity (the transferor) to another (the transferee). The process is governed by UK company law (The Companies Act 2006), tax rules, and also the Articles of Association (i.e. your company’s internal ‘rule book’).
Review Restrictions:
All parties should check the Articles of Association for any restrictions on share transfers.
Complete Transfer Form:
The transferor fills out a stock transfer form and sends it to the transferee.
Calculate & Pay Stamp Duty:
The transferee calculates any stamp duty due and, if applicable, submits the form and payment to HMRC.
Submit to Company:
The transferee sends the (HMRC-stamped, if required) form to the company.
Company Approval:
The company reviews and approves the transfer.
Update Records:
The company updates the registers of members and transfers, issues a new share certificate, and cancels the old one.
Notify PSC/RLE Changes:
If required, the company updates the PSC or RLE register and informs Companies House.
Common Scenarios for Share Transfers
Why do people transfer shares? Here are some common reasons…
- An existing shareholder wants to retire or leave.
- You want to bring on board a new investor.
- You want to transfer shares as a perk of employment/directorship.
- A shareholder wants to transfer shares for tax or family reasons.
- A shareholder has died, and shares need to be transferred to a beneficiary/heir or remaining shareholders.
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Frequently Asked Questions
What is the difference between issuing and transferring shares in a UK company?
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Issuing shares creates new shares and increases the company’s share capital, typically to bring in new investment. Transferring shares involves existing shareholders selling or gifting their shares to someone else, without changing the total share capital.
How do I issue new shares in a UK limited company?
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To issue new shares, the company must pass a board resolution, check the Articles of Association for any restrictions, and file a SH01 form with Companies House within one month of the share allotment.
Do I need to inform Companies House when transferring shares?
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While share transfers are not directly filed with Companies House, the changes should be reflected in the next Confirmation Statement (CS01), which updates the company’s shareholder information.
Is stamp duty payable on share transfers in the UK?
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Yes. Stamp duty at 0.5% is payable on share transfers where the consideration exceeds £1,000, unless the transfer qualifies for exemption. The buyer is responsible for paying stamp duty to HMRC and submitting a stock transfer form (J30).
What is the redemption of shares and how does it work in a UK company?
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Redemption of shares is when a UK company buys back its own shares from shareholders, usually to reduce share capital or return value to investors. Only redeemable shares, as defined in the company’s Articles of Association, can be redeemed. The company must comply with strict rules under the Companies Act 2006, including solvency requirements, board and shareholder approvals, and, in some cases, filing SH02 and SH06 forms with Companies House.
Can non-UK residents hold shares in a UK company?
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Yes. There are no restrictions on foreign nationals or non-UK residents holding shares in a UK company. Ownership is open to individuals or entities worldwide, making the UK attractive for international investors.
What documents are needed to transfer shares in a UK company?
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To transfer shares, you’ll need a stock transfer form, board approval (if required), and an updated register of members. The original share certificate must be cancelled and reissued to the new shareholder.
Do I need shareholder approval to issue new shares?
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Yes. Most UK companies require either existing shareholder consent or prior authority in the Articles of Association to issue new shares. This protects shareholders from dilution of ownership.
Can I issue shares at different values or to different classes of shareholders?
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Yes. UK companies can issue different classes of shares (e.g., ordinary, preference, non-voting) with varying rights and values, provided the Articles allow it and the necessary resolutions are passed.
Can I increase the number of shares in my UK company without increasing the share capital?
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Yes, you can increase the number of shares without increasing the overall share capital by subdividing (splitting) existing shares. For example, 1 share of £1 can be split into 100 shares of £0.01 each. This increases the number of shares in circulation while keeping the total capital the same. A special resolution and a SH02 form must be filed with Companies House to complete the process.
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