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Consideration Money: | Certificate Lodged with the Registrar
(For completion by the Registrar/Stock Exchange) | ||||
Full name of undertaking | |||||
Full description of Security | Ordinary shares of £ | ||||
Number or amount of Shares, Stock or other Security | Words:
| Figures:
| |||
Names(s) of registered holder(s) should be given in full; the address should be given where there is only one holder. | In the name(s) of: | ||||
Date | |||||
hereby transfer the above security out of the name(s) of the aforesaid to the person(s) named below:
Signature(s) of transferor(s) | |||||
Full name(s) and full postal address(es) (including country or if applicable, postcode) of the person(s) to whom the security is transferred.
Please state the title, if any, or whether Mr, Mrs, Ms or Miss. |
| ||||
request that such entries be made in the Register of Shareholders as are necessary to give effect to this transfer | |||||
NOTES:
(1) You don’t need to send this form to HM Revenue & Customs (HMRC) if you have completed either Certificate 1 or 2, or the consideration for the transfer is nil (in which case you must write ‘nil’ in the ‘Consideration Money’ box on the front of the form). In these situations send the form to the company or its registrar.
(2) In all other cases – including where relief from Stamp Duty is claimed – send the transfer form to HMRC to be stamped.
(3) Information on Stamp Duty reliefs and exemptions and how to claim them can be found on the HMRC website at www.hmrc.gov.uk/sd
This Stock Transfer Form template covers:
who is transferring the shares (the ‘transferor’)
who the shares are being transferred to (the ‘transferee’)
how many shares are being transferred and of which type
how much is being paid for the shares (ie the ‘consideration’)
stamp duty certificates (Certificate 1 and Certificate 2)
You will need a Stock Transfer Form or another similar document if you want to transfer ownership of (most kinds of) shares in a private limited company to another person. The Companies Act 2006 requires that most shares are transferred using a proper ‘instrument of transfer’. The most common (and usually the simplest) instrument of transfer is a Stock Transfer Form.
If you’re unsure if a Stock Transfer Form is the appropriate document for you, you should contact a representative of the company whose shares you’re transferring for help.
Stamp duty is a statutory tax collected by the UK Government when you transfer shares using an STF. Stamp duty must be paid unless an exemption applies, the consideration (ie the value) given in exchange for the shares is ‘not chargeable’, or there is no consideration at all. The current stamp duty rate is 0.5% of the purchase price. For information on these situations, read the FAQ ‘When does stamp duty not have to be paid?’.
There is no formal rule on who has to pay any stamp duty due. However, it will usually be paid by the buyer (ie the transferee). It can be decided during negotiations who will pay the stamp duty and this can be set out in a document, for example, a Share purchase agreement.
Stamp duty doesn’t need to be paid if an exemption applies or if the consideration (ie the value) given for the shares is ‘not chargeable’. Consideration is not chargeable (for the calculation of stamp duty for share transfers) when it is of a form other than cash, debt, or other securities (eg shares). For example, if shares are transferred in exchange for the issuance of a life insurance policy, this would not be chargeable consideration and stamp duty would not need to be paid.
If an exemption applies, stamp duty need not be paid. Some of the key exemptions are when the shares are being transferred:
in exchange for chargeable consideration (ie a purchase price) of £1,000 or less
as a gift (ie not in exchange for any money or other consideration)
between spouses or civil partners when marrying or entering into a civil partnership
on divorce or the dissolution of a civil partnership
while they’re held on trust and they’re being transferred between two trustees
following the provisions of a will or the intestacy rules
by a liquidator as part of the winding-up of a company
to a trust’s beneficiaries when a trust is being wound up
as certain types of loan capital
which are traded on a recognised growth market and not on any listed market
For more information on the exemptions, read HMRC’s stamp duty manual.
One of the two ‘certificates’ (known as ‘Certificate 1’ and ‘Certificate 2’) attached to an STF must be filled in to attest that no stamp duty needs to be paid on the transaction. This is the case if, in exchange for the shares:
some but less than £1,000 chargeable consideration has been paid (and the transaction is not part of a series of transactions or a larger transaction where total chargeable consideration is more than £1,000)
more than £1,000 of chargeable consideration has been paid but one of the exemptions above applies, or
no chargeable consideration has been paid but some not-chargeable consideration has been paid
Which certificate needs to be completed depends on which of the conditions above applies. When you use Rocket Lawyer’s template to make your STF, the interview will guide you to ensure that you fill in the correct certificate. If no consideration at all has been provided in exchange for the shares, neither certificate needs to be filled in and no stamp duty needs to be paid.
If you do have to pay stamp duty, you may qualify for a relief. A relief will reduce the amount of stamp duty you have to pay. If you’re claiming a relief you’ll need to send the completed Stock Transfer Form, together with details of the relief you’re claiming, to HMRC for them to consider the relief claim. If you’re claiming relief you don’t need to fill in either Certificate.
Reliefs are available if, for example, you’re transferring shares to a charity or to another company within the same group. For more information, read the Government’s guidance.
It’s important to make sure that your Stock Transfer Form is correctly signed (ie executed). For details, see the ‘Make it legal’ checklist above.
After it’s been signed, within 30 days of the Form being signed and dated you must:
pay any stamp duty that’s payable (you can pay online). Stamp duty must be paid before HMRC can process a Stock Transfer Form. If HMRC has given a formal opinion or adjudication on how much stamp duty you should pay (ie their response if you contacted them to ask for clarification on how much stamp duty is due), you must include electronic versions of any agreement and supporting documents related to this communication, and
email your STF to the HMRC (along with any necessary supporting documents). You can email it as a scanned PDF to stampdutymailbox@hmrc.gov.uk. For more details on how to do this, including what to do if you can’t send your Form online, read the Government’s guidance. You do not need to send your Form to HMRC for stamping if either:
the shares have been purchased for less than £1,000 (and they’re not part of a series of transactions or a larger transaction of more than £1,000) and Certificate 1 has been filled in
the transaction is subject to an exemption or there is no chargeable consideration and Certificate 2 has been filled in
The transferee will usually handle the stamping of the STF, but this isn’t a concrete requirement. For more information on these exceptions, read the FAQ ‘When does stamp duty not have to be paid?’. If you’re not certain whether an exception applies to you, you should Ask a lawyer for assistance.
Once HMRC has checked your Stock Transfer Form and confirmed your stamp duty payments, they will send you a letter (usually via email), which:
confirms that they’ve received your stamp duty payment
details the transactions HMRC are confirming receipt for and the verification (ie reference) codes
provides assurance that the STF has been ‘stamped’ by HMRC, so they will not impose a penalty against the company’s registrar when they register the new ownership of the shares
The transferee should then send the Stock Transfer Form to the registrar of the company whose shares they’re taking ownership of, along with their letter from HMRC (if their Form was sent for stamping) and the share certificate (ie the certificate that attests to the current owner’s ownership of the shares).. The registrar will then register the transferee as the new owner of the shares and will issue them with their own share certificate.
For more information on the transfer of shares, read Share transfers and issuing new shares.
Legal ownership of the shares is only transferred to the transferee when they have been entered as the owner of the shares on the company’s register. This takes place after the STF has been completed and after it’s been stamped (if stamping is required). It’s important that the transfer process has been followed correctly before this point, as the company’s registrar (the person who registers the shares’ ownership) may be subject to fines if they register the shares when any stamp duty that’s due hasn’t been paid.
The shares’ new owner has some protection and benefits during the transfer process, as beneficial (or ‘equitable’) ownership usually transfers to them when an unconditional contract (eg a Stock Transfer Form) has been formed for the sale of the shares. This effectively means that, although the previous owner still legally owns the shares, the new owner can receive the benefit of them. For example, any dividends accumulated between contract formation and registration will usually belong to the new owner. These provisions can vary depending on what is set out in a contract of sale and any provisions for share transfers that the company has in their company documents.
Making your stock transfer agreement online is simple. Just answer a few questions and Rocket Lawyer will build your document for you. When you have all the information about the shares and your transaction prepared in advance, creating your document is a quick and easy process.
You’ll need the following information:
Party details
Who is transferring the shares? This is the ‘transferor’.
What is the transferor’s address?
If the transferor is a company, who will sign the Stock Transfer Form on the company’s behalf?
Who will be the new owner of the shares? This is the ‘transferee’.
Information about the shares
What’s the name of the company whose shares you’re transferring?
How much is each share’s nominal value? This is a value initially assigned to a share when it’s issued (ie not its market value). The nominal value can be found on the share certificate.
How many shares are being transferred?
How much (if anything) is being paid for the shares? (this is the ‘consideration’).
Determining stamp duty
Do any of the stamp duty exemptions apply? Or, is there no chargeable consideration?
Stock Transfer Forms are an integral part of the share transfer process. It’s important that they’re accurate and complete, to avoid delays, mistakes, and potential penalties. To create a compliant Stock Transfer Form, this template includes sections covering:
consideration money - this is the monetary value of what’s being exchanged for the shares. This includes not chargeable consideration (see the FAQ ‘When does stamp duty not have to be paid?’)
if the consideration includes not chargeable consideration in the form of assets that are too difficult to precisely value (eg assets with fluctuating value), you should Ask a lawyer for help using your STF for this situation
if no consideration at all is being exchanged for the shares, this section must say ‘Nil’
‘certificate lodged with the registrar’ - sometimes the transferor will lodge the share certificate(s) directly with the company (ie give them to the company’s registrar) rather than giving it/them to the transferee. This usually occurs when only part of the transferor’s shareholding in the company is being transferred. In these situations, the registrar will indicate in this section of the STF that they have the share certificate(s)
full name of undertaking - this refers to the company whose shares are being dealt with
full description of security - this is where the shares being transferred are described. It sets out the class of share being transferred - this template is designed for the transfer of a single class of ordinary share. You must also provide the nominal value of the shares here. This is a value initially assigned to a share when it’s issued (ie not its market value). This can be found on the share certificate
number or amount of shares, stock, or other security - this is where the amount of shares being transferred is set out in numerals (figures) and in words
date - the date that the STF is executed should be inserted here. This should be done on paper once the Form has been signed (ie executed). For more information, see the ‘Make it legal’ checklist above
name(s) of registered holder(s) - this section sets out the current owner of the shares (ie the transferor). If there’s only one transferor, their address will also be included here
‘I hereby transfer the above security…’ - this is the statement attesting to the transfer (ie setting out the purpose of the document being signed)
signatures of transferor(s) - this is where the transferor(s) sign
if the transferor is a company, ‘acting by’ refers to the person who is signing on behalf of the company
if only one director is signing on behalf of a company, there is also space in this section for a witness’ signature and details
‘full name(s) and full postal address(es)... of the person(s) to whom the security is transferred’ - this is the person, people, or company to whom the shares are being transferred (ie the transferee)
‘We request that such entries be made in the Register of Shareholders…’ - this is the transferee’s request to the company’s registrar, asking that they be registered as the shares’ new owner(s)
Certificate 1 - this is the certificate that must be completed if the transaction is exempt from stamp duty because the chargeable consideration exchanged for the shares was £1,000 or less. The transferor should sign this section. By signing this certificate, they are also promising that this transaction is not part of a larger transaction or series of transactions (ie for more shares) which, in total, are for more than £1,000 of chargeable consideration. This is to prevent people from avoiding paying stamp duty by simply splitting a larger transaction into multiple STFs
‘ad valorem’ means a tax that is set depending on the assessed value of something (eg shares)
Certificate 2 - this is the certificate that must be completed if the transaction is exempt from stamp duty because there is no chargeable consideration (but there is some consideration) or if one of the exemptions applies other than the £1,000 or less exemption. The transferor should sign this section to promise that one of these situations applies. For information on the exemptions, read the FAQ ‘When does stamp duty not have to be paid?’
If you want your Stock Transfer Form to include further or more detailed provisions, you can edit your document. However, if you do this, you may want a lawyer to review the document for you (or to make the changes for you) to make sure that your modified Stock Transfer Form complies with all relevant laws and meets your specific needs. Use Rocket Lawyer’s Ask a lawyer service for assistance.
Be certain that, if any exemptions from stamp duty apply, you’re correct
If the correct stamp duty is not paid on time, transferees may be subject to significant fines and interest. Moreover, if a new owner of the shares is registered before any outstanding stamp duty has been paid, the registrar responsible for the registration may be subject to fines. To avoid this, it’s important to be sure that any exemption you rely on (eg any declarations you make in Certificate 1 or Certificate 2) is accurate. For example, if you’re making calculations including not chargeable consideration, you must be sure that you’re handling this correctly. Read the FAQ ‘When does stamp duty not have to be paid?’ for information on the exemptions. If you need help, you can ask HMRC for assistance or Ask a lawyer for help.
Protect your interests during the share transfer process
Transferring ownership of shares is not an instantaneous process. It can be prudent to protect your interests during the process, for example, by including provisions in a contract that set out who receives dividends and who can exercise voting rights during the transfer period. You can do this in a Share purchase agreement.
Understand when to seek advice from a lawyer
If you’re unsure about how to accurately complete your STF or how to best protect your interests, it’s often a good idea to Ask a lawyer for assistance. Consider asking for advice if:
either the transferor or transferee is acting through a personal representative, attorney, deputy, or agent
you’re transferring shares in a company that isn’t a limited company
the shares being transferred are unpaid (or ‘nil paid’) or partially paid
the shares being sold aren’t ordinary shares or the company has multiple classes of ordinary shares
a company is purchasing its own shares (additional paperwork, such as Form SH03, will be required)
the company isn’t based in England, Wales, or Scotland
