Share Transfers

The Companies Act 2014 re-enacts provisions regarding the transfer and transmission of shares and debentures, requiring an executed instrument of transfer for registration. The company deals only with legal ownership, ignoring trusts or equitable interests. A transferor remains the registered shareholder until the transferee’s name is entered into the register, which is updated upon submission of the transfer instrument, old share certificate, and payment of stamp duty at 1%.

Directors of private limited companies have broad discretion to refuse registration of transfers, but must act in good faith and notify the transferee of refusal within two months. Grounds for refusal may include maintaining company control, such as preserving its status as a family business. Where registration is refused, the transferor holds shares in trust for the transferee, who receives voting and dividend rights.

On death, shares pass to survivors or the personal representative, who may elect to register themselves or a nominee as the transferee, subject to similar registration restrictions. Shareholders’ agreements or bespoke articles may outline rights, including pre-emption or insurance-backed buyouts. Fees may apply for probate registration. In bankruptcy, shares vest in the Official Assignee but may be disclaimed if burdensome. Mortgages on shares may involve legal or equitable transfers, with stop notices used to protect the mortgagee’s interest.

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