A Stock Transfer Form transfers shares from one person to another. If you are transferring shares in your company, you must complete the mentioned form, also known as a Share Transfer Form.
To make this process easy for you, we have created this brief guide on how to fill out a Stock Transfer Form.
What is a Stock Transfer Form?
A Stock Transfer Form is a form that must be filled in to transfer shares in the UK. It states the parties to the transfer, the name of the company that holds the shares, and the consideration provided.
Consideration refers to the value of what is paid for the stocks and shares. You need to state the amount if the person buying the shares pays cash.
If there is zero consideration, this must be recorded. Consideration can also include other stocks or satisfaction of a debt.
Do I have to pay stamp duty when registering a stock transfer?
If the stocks and value of the shares £1,000 or less, stamp duty is usually not payable. The transfer may also be exempt from stamp duty if no chargeable consideration is made or your company or the purchaser is eligible for stamp duty relief.
Who signs a Stock Transfer Form?
The share transfer form should be signed by the person transferring the shares. Usually, is the seller or sellers, as all joint holders should sign to transfer a joint shareholding.
There are a few situations where someone else may sign Stock Transfer Forms:
- The legal personal representatives
- A power of attorney, if it has been registered with the company, the attorney may sign on the seller’s behalf
Do I send Stock Transfer Forms to Companies House?
No, you don't need to send a Stock Transfer Form to Companies House. However, as a director, you will need to update your company’s share register with the name and other particulars of the new share owner/s.
Once you have completed the form, you will need to send the Stock Transfer Form to HMRC.
The rules regarding stamp duty changed on 25 March 2020. You can no longer post a Stock Transfer Form, but it can be emailed.
Can a Stock Transfer Form be signed electronically?
Yes, you can use an electronic signature on a Stock Transfer Form.
Free Shareholders Agreement template
What happens next
Once HMRC has checked the form and confirmed receipt of payment, they will send you a letter confirming receipt of stamp duty; with this transaction, they are giving assurance that HMRC will not pursue a penalty against the registrar for registering the new owner of the shares.
You must send this letter to the registrar of the company you have bought shares in, along with the Stock Transfer Form and Share Certificate.
What is a Share Purchase Agreement, and how does it differ from a Stock Transfer Form?
A Share Purchase Agreement is a contract between a buyer and seller setting out the agreed legal terms for a transfer of shares.
Unlike a Stock Transfer Form, a share purchase agreement is a more complex legal agreement.
The good news is that you don’t need a share purchase agreement as a seller to transfer shares; you only need a Stock Transfer Form.
However, in some cases, a buyer and seller may want additional legal terms to apply to the transfer of shares. This is mainly used when there is a significant stake, entire ownership, or if a company is being transferred.
Get legal assistance from LawBite
Filling in a Stock Transfer Form can be confusing, especially if you are not sure whether stamp duty is owed or not. If you have any questions or need help, contact our friendly solicitors, who can assist you.
LawBite has experience helping startups and businesses achieve their long-term commercial ambitions and regulatory compliance.
To find out how we can help support you book a free 15 minute consultation or call us on 020 3808 8314.
