Introducing New Shareholders to a Limited Company – Transfer of Shares

Posted in Company Secretarial, Our Blog

hand shake eileAs discussed in our blog of 22 May, new Shareholders can be introduced to a company in 2 main ways, the allotment of shares and the transfer of shares. In their basic form, allotment and transfers are a simple procedure, however it is important to understand the basic requirements as these are the important part of more complex transactions like Share for Share Exchanges and Share for Undertaking.

Transfer of Shares
Shareholders have the ability to transfer their shares to existing shareholders or third parties. This allows shareholders to sell their shares or for companies to be bought and sold. Some examples where we have used transfer of shares are as follows:

  • Shareholder wants to transfer shares to existing shareholders
  • Shareholder wants to exit company by transferring to existing or third parties
  • Succession Planning (transferring shares to spouse or siblings)
  • Share for Share Exchange
  • Company Takeover
  • Company Restructuring or putting a group in place

In a Private Limited Company, Directors have right to refuse any transfer of shares once the reasons are in the best interests of the company and are not oppressing any shareholder rights.

The Memorandum and Articles of Association and any Shareholders Agreements should be reviewed prior to any transfer for any restrictions on the transfer of shares.

A transfer of shares must be approved by the Directors and the appropriate stamp duty paid to the Revenue Commissioners. Stamp duty is calculated at 1% of the total consideration paid or the market value for the shares. If the value of the consideration or the market value of the shares is less than €1,000, the stock transfer form does not have to be stamped.

Stamp duty must be calculated and paid using Revenue’s ROS system. Once the appropriate stamp duty is paid, the Revenue will issue a stamping certificate which must be provided to the Company as proof that the appropriate stamp duty has been paid.

The Company should then write up the Register of Members and Register of Transfers and issue a new share certificate.

 

See Related Article: Allotment of Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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