Transfer of Shares

Transfer of Shares

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A client has herself as sole shareholder of a Ltd company. The company was set up by her previous accountant with 1,000 shares but just 1 share allotted to her. There is no reason for this as the husband also works in the company full time.

How can she gift a share to her husband under IR295 if she only has 1 share? Can the company gift the share to him under IR295 or do we have to increase the wife's share and transfer to husband? Or can we just give the husband half her share so they both have 0.5 shares each?

Many thanks for any help.

Peter Watkin

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By Paul Soper
01st Dec 2006 19:04

s617 (s660A as was)
A consideration here could be avoiding an Arctic Systems situation although the fact that he works full-time should prevent that happening.

If the share was placed into joint names she would have gifted one-half of the share to him and the law would split the income in the ratio of underlying ownership. However to avail oneself of s660(A)(6), as was, s626 as it now is it is important that the gift carries the right to the whole of the income, and this would not work with a share in joint names as company law would assume a payment to the first named shareholder.

If there is any remote danger of s617 applying it could be safer to go down the more long-winded route of either issuing a second share to the current shareholder, or even reorganising the capital and having a share split (! not wholly serious) so that a share can be gifted, using a share transfer form duly lodged etc etc, to ensure that the outright gift protection applies.

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