Share and Stock Transfer Form

Article Written By: netlawman

The stock transfer form is one of the basic documents used following incorporation of a company. It is used to record the transfer of stock from one shareholder to another. Depending on the reason for transferring stock, there may be different documents required to initiate the transfer. While the transfer of shares is not difficult, many people have questions about what they should do. Shares in a company are often transferred by private agreement between the seller and the buyer.

Even though specific requirements for transferring shares may differ, there are some general guidelines required by most guarantors.

Things You'll Need

• Stock transfer form

• Letter of instruction

• Original stock certificates

To complete the stock transfer form you will be asked to provide the following information:

• Consideration money (How much is being paid for the shares)

• Name of Security (e.g. 100 Ordinary Shares for XYZ LIMITED)

• Description of Security

• Number of shares transferred

• Name and address of transferor

• Name and address of transferee

• Authorising signature from both parties

When you buy shares valued above £1,000 using a stock transfer form, you usually have to get the form stamped by HM Revenue and Customs (HMRC) and pay Stamp Duty

If you buy stocks and shares for £1,000 or less you don't normally have to pay any Stamp Duty. You also don't have to tell HM Revenue and Customs (HMRC) about the transaction.

All you need to do is:

• make sure the exemption certificate on the back of the stock transfer form has been completed

• send the stock transfer form and the share certificate to the registrar of the company you've bought shares in

The rules above have applied since 13 March 2008. If a share transfer with a value of £1,000 or less was agreed and signed before that date, it will need to be stamped by HMRC and you'll have to pay Stamp Duty.

The amount of Stamp Duty you pay is based on the 'consideration' you give for the stocks or shares. The consideration can be:

• cash

• other stocks and shares

• debt, which is usually related to the loan stock

You pay Stamp Duty at the rate of 0.5 per cent of the value of the consideration, rounded up to the nearest £5, on each document to be stamped.

Net Lawman will not only provide you new version of stock transfer form in simple form and plain English, but also calculate your stamp duty accordingly.

The procedures that need to be followed by a shareholder to have their shares transferred to another person are set out in the Articles of Association of a company. Typically, even for listed companies, where there is a printed share certificate (as appose to the shares being held electronically on CREST) a transfer needs only that the share certificate together with a valid signed stock transfer form are delivered to the company's registered office or to the company's outsourced share registrar.

The changes require a new stock transfer form to be used. The front of the form remains unchanged. The current certificate on the reverse of the form is no longer required and has been removed. The new 'self certification certificate has been added to the reverse of the form for transfers on sale where the consideration is £1,000 or less. Note, there will no longer be a need to certify certain transactions on the reverse of the stock transfer form, e.g. transfers between nominees where there is no change in the beneficial ownership of the shares, and the certificate will be removed from the form.

You should ensure that the standard stock transfer form has been sent by the transferor showing the number and type of shares, the price and the name of the transferee. You should also confirm that the form has been signed by the transferor and that the stamp duty payable on the transfer of shares has been paid.

Furthermore, you should check whether there are any restrictions on the transfer of shares in the Company's Articles of Association. Share transfer dealing is a complex area and specialist advice should be sought from Solicitors and Barristers.

About the Author

For more information about stock transfer form visit us at http://www.netlawman.co.uk

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