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use of stock transfer form to transfer shares

can stock transfer form be used to transfer shares in company X and owned by company Y to a person Z

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My company Y owns shares in another company, company X.  I wish to transfer the shares out of my company into my own name using a standard stock transfer form.  Can I do this and if so do all the directors of company Y need to sign as transferors or is the signature of the company secretary sufficient?


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By Youareatit
29th Dec 2020 17:34

Legal issue.

More to it than just a form.

Ask your advisors.

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By Wanderer
29th Dec 2020 17:35

Before you consider the mechanics of the transfer have you considered the tax effects of what you are proposing to do?

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By johngroganjga
29th Dec 2020 17:40

That’s a legal question really, but for what it’s worth I think the answer is that only one officer (i.e. director or secretary) of the company making the transfer needs to sign, but they must be authorised to do so by the board on whose behalf they are acting.

If you haven’t already done so, take tax advice on the consequences for you if you pay the company less than full value for the shares.

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By Paul Crowley
29th Dec 2020 17:48

Really need to look at the articles
Confused question
Quite normal for companies to restrict transfers of shares eg must be offered to existing shareholders X

Does your company Y have other directors and shareholders?

Chat to your advisor, cos there is so much that you could get wrong

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By fawltybasil2575
29th Dec 2020 20:10

@ bluehorizon1234 (OP).

The above eminent members have (entirely correctly) pointed out that simply answering your question is NOT the most important consideration.

As with many questions, one needs (in order to provide a more detailed response) to ascertain more information, in this case especially (i) the amount at issue, (ii) the nature of Company X shares, and (iii) the numbers of (a) shareholders and (b) directors in Company Y.

Hence, for example if one is considering a case ("scenario 1") where the Company X shares at issue are 100 shares in a public company with a total market value of £200 (the shareholders/directors in Company Y being yourself and your wife, owning 50 shares each), then the guidance would be entirely different from a case ("scenario 2") in which:-

(a) There are 3 directors and 6 shareholders (all unrelated) in Company Y,
(b) Company Y is a private company with Net Assets per its last Financial Statements of 3 million pounds, and
(c) The Company X shares to be transferred have an estimated market value of 1.3 million pounds, and will be transferred to you (Z) at a price of 1 million pounds.

If “scenario 1” applies, then the recommended advice would probably be to (i) ensure that the proposed transfer is not in breach of Company Y's articles (and to then arrange a formal Meeting of Directors, approving the transfer); and then to (ii) write to Company X’s company secretary to advise that Company Y is considering disposing of its 100 Company X shares to yourself for £200, and ask whether submitting a Stock Transfer Form to Company X is “likely to be accepted as a valid share transfer such that I will be thereafter shown as the new shareholder in your company”.

If “scenario 2” (or indeed anything materially more complex than "scenario 1") is however appropriate, then frankly you are strongly advised to seek the advices of your own solicitor before proceeding further.

There are potentially both legal and taxation aspects which might arise in many cases.

Noting that there are at least 2 directors in Company Y, I would always ensure that a formal Meeting of Directors (in Company Y) takes place, the Minutes thereof being signed by the Chair (and countersigned by the other Director(s) and Secretary) approving the Share Transfer, before the Stock Transfer Form is prepared.


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By SteveHa
29th Dec 2020 21:53

How very typical of Aweb. Far too little information to provide any kind of meaningful answer (though Basil gave it a go).

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Replying to SteveHa:
By I'msorryIhaven'taclue
30th Dec 2020 12:35

That particular avenue of pleasure hasn't been closed off to him.

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By bluehorizon1234
30th Dec 2020 18:16

Thank you to all for your replies, particularly that of Basil. My replies to his queries are that company X is a PLC and the shares are publicly quoted. They are worth less than £1000. Company Y has four directors all of whom are shareholders. They own all the shares. All have agreed to the proposed transaction. Therefore Scenario 1 is the closest.
There are no taxation issues and a loss can be shown.
I have therefore concluded that a Stock transfer form can be used and the signature of the company secretary is (probably) all that is required provided he/she has the authority to do so from the other directors.
Thanks to all once again

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Replying to bluehorizon1234:
By Paul Crowley
30th Dec 2020 18:29

As you can see, incomplete questions do waste time
This would be a simple short thread if you put full details in the opening post, eg PLC X rather than Co X

Does the question indicate that all shareholders agree, or even that the sum involved is trivial?

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By fawltybasil2575
30th Dec 2020 19:05

@ bluehorizon (OP).

Thank you for clarifying (your post at 18.16). Given the immaterial amount at issue, the preparation of a written document, to be signed by the 4 director/shareholders, is all that is required, along the lines of :-

“We the undersigned, being the four director/shareholders of Y Ltd, confirm our agreement to the transfer of Y Ltd’s 200 Ordinary Shares in Bongo Drums plc, on xx/xx/xxxx, at a price equivalent to the Market Value of those shares on xx/xx/xxxx, ie £847.32, to Joseph Blue.

. . . . . . . . . (Joseph Blue)
. . . . . . . . . (Fred Horizon)
. . . . . . . . . (Tim Cloud)
. . . . . . . . . (Georgina Blizzard)

Signed and dated this fifteenth day of January 2021.”

If it is normal to hold formal Board Meetings for such transactions, then of course holding such a meeting (which is recommended) is in order, using words similar to the above.


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Replying to fawltybasil2575:
By Wilson Philips
30th Dec 2020 20:05

I don’t disagree with any of that. There is an assumption, though, which is not supported by anything provided by the OP, that he is going to pay something for the shares (but which in any event is of no relevance to the question asked).

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Replying to Wilson Philips:
By Tax Dragon
31st Dec 2020 11:33

He must be going to pay for them - he said there's no tax issue.

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