Transfer of Shares in a Private Company
The procedure for making such a transfer may seem relatively straight forward, but if it is to be done correctly, it involves more than simply having a stock transfer form signed. Entries must be made in the Company’s Minute Book, Register of Transfers and Register of Members.
The old share certificates must be cancelled and new certificates issued under the company seal of the company. If the old share certificate is lost, then an indemnity has to be completed. The Company’s articles of association or the constitution must be inspected to see if there are any restrictions on the transfer of shares. The stock transfer form must then be sent for stamping by the Revenue Commissioners if the transfer value is in excess of €1,000 or the parties to the transfer are related by blood or marriage. The share transfer is subsequently recorded in the companies next annual return.
Procedures Required to Transfer Shares
- Completion of share transfer forms
- Completion of Revenue Commissioners form SD4
- Changes to be recorded in the Company’s Minute Book
- Changes to be recorded in the Register of Transfers
- Changes to be recorded in the Register of Members
- Cancellation of old share certificates
- Issue of new Certificates under the Company Seal and signed by a director and company secretary
- Check the articles of association or the constitution to ensure there are no restrictions on the transfer or issue of shares
- Should any restrictions be in place a special resolution will need to be passed and the constitution amended and filed at the Companies Registration Office
- Presentation of the share transfer(s) to the Revenue Commissioners for stamping
Form SD4 enable the Revenue Commissioners to assess the market value of the shares being transferred and establish the correct stamp duty to be paid. Occasionally the Revenue Commissioners will request additional information, particularly when the change is between those related by blood or marriage, i.e. previous years accounts.
If the amount or value of the consideration of the share transfer is €1,000 or less and that parties subject to the transfer are not related by blood or marriage then the transfer is exempt from stamp duty.
Upon completion of the signed share transfer by the transferee the document should be forwarded to the person that maintains the share register of the company to record the transfer and make the necessary changes in respect of the share certificates.
If the value for the shares is found to be understated, the Revenue Commissioners have the power to impose surcharges. (Finance act 191 (Section 103))
Fixed fee penalties and interest are charged for late payment of stamp duty:
|If paid within:||Penalty||Interest||Monthly % unpaid duty|
|30 days of execution||None||None||N/a|
Complete a Share Transfer
We can attend to the secretarial requirements of share transfers, complete a share transfer or issue shares on your behalf. We will require the following:
- Full name and address of the transferors and transferees
- How many and what type of shares are being transferred
- Share certificates for cancellation
- A copy of the Combined Company Register and Minute Book
- A copy of the latest filed memorandum and articles of association or the constitution or an instruction to obtain from the Companies Registration Office
- If the value given for the shares is subsequently found to be understated, the Revenue Commissioners have the power to impose surcharges
As you can see it is important that your stock transfer forms are submitted as quickly, and as accurately, as possible. The market value of shares in a private company is an area that is open to wide interpretation, and for this reason, the Revenue Commissioners strongly encourage the completion of a form SD4, when sending in stock transfer forms.
If the considered value of the share transfer is less than €1,000 and the transfer is between persons not related by blood or marriage it is not necessary to submit the documents to the Revenue Commissioners for stamping. However the share transfer documents should be retained to be recorded in the next annual return.
This form allows them to make an assessment of the value of the shares being transferred and ensure that the correct duty is being paid.