Congratulations! You’re either a newly formed business, or you’ve been running your brand from a reputable business address for some time. But with the plaudits comes the pressure; not least the overwhelming number of documents you must process and submit. And when you’re a UK company limited by shares, there may be a time where you need to transfer shares. Enter the stock transfer form.
What Is a Stock Transfer Form?
In order to transfer shares in UK companies limited by shares, you must complete a stock transfer form. A stock transfer form records the share transfer details, including names of the buyer(s), the number and type(s) of shares, and what the value or monetary exchange for those shares were (for example, “the consideration”). Simply put by GOV.UK, a stock transfer form “transfers shares from one person to another”.
The two types of stock transfer forms:
- J30 form (used to transfer fully paid shares)
- J10 form (used to transfer unpaid/partly paid shares).
The J30 form is perhaps the most commonly used form since the transfer of fully paid shares is more prevalent.
Send Your Stock Transfer Form to HMRC
According to GOV.UK, when you’re completing a stock transfer form to send to HMRC you must provide comprehensive details of the sale, including:
- the shares being transferred (the quantity, class and type, for example 100 ordinary shares, ABC Limited)
- the buyer
- the seller
You also need to provide the value of what you paid for the shares in either:
- cash
- other stock and shares
- debt
This is known as the chargeable consideration.
Enter “Nil” as the consideration if you do not give any consideration for the shares. If you give consideration in money for the shares, state how much.
If the transfer is exempt from Stamp Duty, or no chargeable consideration is given for the transfer, you need to complete one of the certificates on the back of the stock transfer form (Certificate 1 or Certificate 2). You need to complete a different certificate depending on what you paid for the shares.
It will take approximately 5 to 10 days for HMRC to process and return the stamped stock transfer form and share certificate. Be sure to store the returned stock transfer form with your company records, issue a new share certificate, and update your statutory register of members, accordingly.
The Different Circumstances of Shares
The reporting of share transfers and payment of stamp duty will be dependent on the circumstances of a particular share:
- You do NOT need to notify HMRC (or pay any subsequent stamp duty) where share transfers have a sale value, or “chargeable consideration”, of £1,000 or less. As stated, this includes shares that are given for “nil” consideration (i.e. gifted to someone) — this is when Certificate 1 (found on the reverse of the share transfer form) must be completed and signed.
- When share transfers are classified as exempt of stamp duty (e.g. they are left to someone in a will), there is NO need to notify HMRC of the transfer — this is when Certificate 2 (found on the reverse of the stock transfer form must be completed and signed).
- If the share transfer value exceeds £1,000 and is otherwise subject to stamp duty, then the transferee (new shareholder) must pay stamp duty to HMRC at the rate of 0.5% of the sale value. This is when the stock transfer form must be completed and sent to HMRC’s stamp duty office for stamping within 30 days of the date of the transfer. The form must be accompanied by the existing share certificate and a covering letter. You can pay stamp duty on shares to HMRC by BACS transfer, online, or by cheque. If a BACS transfer or online payment is made, it’s advised to provide the payment reference along with the amount and date paid.
Companies House Does Not Need to Receive Your Stock Transfer Form
A stock transfer form does not need to be submitted to Companies House. However, a company director must update the company’s statutory register of shareholders in order to record the details of the share transfer. As stated, a copy of the stock transfer form, along with any resolutions and copies of share certificates relating to the transfer, must also be kept with the company’s statutory registers.
Simply put, Companies House should be informed of the new share transfer information via the next updated confirmation statement (Companies House form CS01).
What Details Are Required on the Stock Transfer Form?
The following details will be required:
- Your company’s name
- Company Registration Number (CRN)
- Quantity and class(es) of shares being transferred
- Existing shareholder (transferor) name and address
- New shareholder (transferee) name and address
- The amount paid for the shares
- If applicable, the details of non-cash payments
- Transferor’s signature
- If applicable, stamp duty liability
It’s worth noting, for some companies, current shareholders have to pass a special resolution in order to waive their right to pre-emption on the transfer of shares.
Remember...
Legally, there are no restrictions on the number of shares a private company can issue during or post incorporation, in accordance with the Companies Act 2006. However, some restrictions may be included in the articles of association and shareholders’ agreement (find out how to get a copy of memorandum and articles of association).
Most importantly, upon completion of the transfer of company shares, the director(s) must provide a copy of the stock transfer form to both the transferor and transferee. The company should also keep a copy with its statutory records stored at the registered office or SAIL address.
To find out more about a stock transfer form, or for help and advice with sending a stock transfer form to HMRC, contact our professional and experienced virtual office experts, today.
