Although appearing simplistic, the issue or transfer of shares can be a daunting and complex task to complete successfully. It is imperative that concerned parties get expert assistance from qualified, registered and seasoned agents, eg. solicitors and tax advisors.
Typical situations where the need for Share Transfers Arise
There are numerous instances where such a course of action becomes a necessity. These include when:
- Equity is apportioned in exchange for monetary investment made into the entity
- When reorganising the firm’s departments, roles and work processes
- One spouse or parent is distributing or sharing their fortune with their marriage partner or offspring
- Remunerating the responsible director of the sales division for meeting the set goals
The Share Transfer Process
- For transfer of shares, a Stock Transfer document has to be crafted
- For allotment or issue of shares in the company, the B5 document is crafted and forwarded to the Companies Registration Office
- The Revenue papers, SD4, are filled and sent
- Settlement of the Government Stamp Duty where it is applicable
- The share ownership alterations are recorded in the relevant Companies Minute Book and in the registers of Transfers and Members
- It is a necessity for the nullification of previously drafted share certificates to occur and their subsequent replacement with up-to-date ones that show the changes in share ownership structure. The new certificates ought to have the official seal of the firm. In a scenario where the previous certificates have been misplaced or are missing for some reason, the company must fill an indemnity form.
- Scrutiny of the entity’s constitution, the memorandum of association and the articles of association. This process ensures that there are no constraints that affect the transfer or issue of shareholding stakes
- If constraints to the change of share ownership exist in the company documentation, a Special Resolution is needed to resolve the impasse, before forwarding the documentation to the Registrar of Companies’ offices
- Forwarding of the share transfer documentation to the Revenue Commissioners for impression with the official stamp
Some Pertinent Details to Remember
The Government Stamp Duty can be a contributor to how the share transfer process plays out. The law imposes no stamp duty fee on considerations for transfer of shares that do not exceed 1000. The SD4 form is utilized to ascertain the exact market value of an entity in order to establish the need or absence of need of the stamp duty fee. Additional tax fees may apply depending on the nature of the transfer. If the Revenue Commissioners determine that the market value is in fact devalued or is higher than stated, they can slap the company with additional charges as a penalty.
In situations where issuing of shares or their transfer leads to a new person owning 25% or higher of the entity’s total equity, there may be an obligation for that the firm to bring the Central Register of Beneficial Ownership (RBO) up-to-date.
Companies needing assistance with issue or transfer of shares in Ireland can contact the many qualified professionals located in the country for expert services.