Transfer of Shares

Are you the owner or director of a private company incorporated in Singapore?

Do you know that the transfer of shares must be done in accordance with the stipulated procedures of the regulating authorities?

Generally, shareholders may want to transfer their shares due to a number of reasons. All the same, it is important to follow proper procedures to uphold and legitimize the entire process.

This guide will run you through the laid down procedures mandatory for a Singapore Private Company to transfer shares.

Rights to Transfer Shares

Shareholders have the right to transfer their shares without the directors’ refusal because they are the bona fide owners of those shares. They are not restricted to initiate the transfers when they decide to unless it is prohibited by the company’s constitution or regulated by a statute.

It must be an outright disposal of the shares without the transferor retaining any interest in those shares, that is, a transfer by which “the transferor bona fide divests himself of both the benefit and the burden”. The right to transfer shares can also be restricted by way of an agreement.

However, in a Singapore Private Company, it should be noted that the constitution of the entity must restrict the right to transfer its shares even though this is not categorically addressed in the Companies Act.

These methods of restriction start with pre-emption rights, whereby the owner of the shares permits another shareholder to buy the shares, before the actual transfer takes place. The board of directors of your company should also approved the transfer.

The nature of the restriction on the share transfer must be fully set out in the constitution of your company.

It is not sufficient for the constitution to state that the transfer of shares is restricted. The courts will not generally construe a restriction clause too strictly.

The following are the situations in which your company should not register or approve a transfer of shares:

  • The transfer of shares is not bona fide: for example, where the transfer occurred for the sole purpose of benefitting the transferor by circumventing legal liability;
  • The transfer of shares is initiated illegally to accomplish an illegal objective; and
  • The transfer of shares lacks the required stamp duty (if such duty be payable).

In addition, among other restrictions, a number of companies used their constitution to empower their directors with the right to approve or disapprove a transfer.

Where the company does not register a transfer due to directors’ discretion, the company must serve a notice stating the company’s reasons for refusing to register the transfer.


The Singapore Court can subsequently decide on the validity of such reasons. Note that:

  • Such discretion by the directors must be provided for in the constitution.
  • In exercising such a power, the directors must act in virtue with regard to the company interests and not for any collateral purpose.

Instruments of Transfer

Shareholders may write and deliver a suitable instrument of transfer to their company in order to initiate the process of transferring their shares. In this case, the board of directors must approve the transfer.

In accordance with the Stamp Duties Act (Cap 312) of Singapore, the prescribed form must be duly stamped electronically (using the “e-Stamping’ process in Singapore) before the instrument of transfer is executed.

However, there is no penalty as long as the document is stamped within:

  • 14 days after it was signed in Singapore; or
  • 30 days after it was received in Singapore but signed in a foreign country.

When you want to assess the stamp duty, you must include the requisition documents during the e-Stamping process:

  • Transfer of Shares – Form E4A;
  • For a Private Company with Issued Ordinary Shares – Worksheet D (Form E4A); and
  • For a Private Company with Preference Shares – Worksheet E (Form E4A).

Typically, if you are transferring shares, you are subject to a 0.2% stamp duty of the value of the shares or their purchase price (the higher figure is chosen). For the purposes of e-Stamping, the value of the shares are as follows:

  • The value of scrip shares listed on the SGX represents the average price as per the document’s date. If the average price is not available, the most recent average price is applied. There is no stamp duty payable on the transfer of shares that are traded on the SGX scripless system.
  • Shares in private companies (if they are 18 months or more since incorporation) are valued at the net asset value (NAV) of the shares. In case you have different classes of shares, the rights of each class of shares are applied.
  • Shares in private companies (if they are less than 18 months old since incorporation) are valued at the allotment price if your company is yet to own property. If your company has property, the NAV of the shares can be determined using your management accounts.

Registration and Certification of Share Transfer

A transfer of shares in a private company is only completed when relevant notices of the transfer of shares and any appropriate documents have been lodged with ACRA, and ACRA has subsequently amended the register of company members.

In case your company fails to register a transfer due to directors’ discretion, the company must serve a notice stating the company’s reasons for refusing to register the transfer.

A transfer in scrip shares of a public company requires the return of the share certificates by the transferor within a stated period (being between 7 and 28 days of the notice to amend the register), and registration of the transfer by such public company.

In relation to scripless shares traded through the CDP, a transfer of shares is effected by the CDP making the appropriate entry in its registry. A transfer made in this way may not be challenged on the grounds of validity.

The CDP issues a confirmation note setting out the relevant transaction information.

Notice of Refusal

There are instances when a company might refuse or disapprove the transfer of shares. When this happens, the company must notify the transferor and transferee about that refusal in writing. This notice must be sent within 30 days starting from the date the transfer lodged the instrument of transfer with the company.

Stop-notice and Charging Order

A stop-notice is a device used to protect beneficial owners of shares. Anyone who claims to have a beneficial interest in the shares and who wishes to be notified of any proposed transfer or payment affecting the relevant shares can make use of this procedure.

The company may not register a transfer or make any payment of interest or dividend without first informing the stop-notice applicant of the request of transfer or payment. The alleged beneficial owners of shares may also apply for an order from the Singapore Court to prohibit the transfer of shares altogether.

Effect of Certification

When your company certifies an instrument of a transfer of shares, it is making a representation to anyone who acts in the best interests of your entity with respect to the certification. This means that your company agrees that it has received the documents and has approved the instrument of transfer.

However, note that the certification of a transfer does not amount to a representation by the company that the transferor has any title to the shares.

Alteration of Class Rights

When Class Rights May Be Altered

When it comes to the alteration of class rights, it is important to know whether they are contained in the constitution of your company or in a resolution authorising the issue of shares of that particular class.

If the class rights are contained in the constitution, they may be altered by special resolution, subject to any entrenching provisions in the Companies Act.

If the class rights were contained in the company’s constitution before 1 April 2004 and without any alternation, they may be altered by unanimous decision of the shareholders.

When class rights are found in a resolution of the company, they may be varied by altering the resolution.

Minority Protection in Alteration of Class Rights

In accordance with the Companies Act, the law provides for the protection of a minority of any class affected by the variation or nullification of rights associated with their shares. It permits the shareholders to owning an aggregate of not less than 5% of the concerned class of shares to apply to the court to cancel the variation or nullification.

Once the shareholders make the application, the nullification or variation will only take effect as soon as the court confirms it. You will have 14 days to lodge the order made in pursuance of such an application with the Registrar.

However, under section 74 of the Companies Act, this protection only applies to shareholders of a company which has an abrogation of rights clause in its constitution. Where there is no such clause, minority shareholders may take action under s 216 of the Companies Act (which provides general protection against the oppression of minority shareholders).

The issue of preference shares ranking in pari passu with our company’s existing preference shares is considered a variation of the rights associated with the preference shares in accordance with section 74(1) of the Companies Act.

Therefore, it may give rise to a right to apply to the court for a cancellation unless the second issue is authorised by the terms of the existing preference shares or by the company’s constitution.

Conclusion - Transfer and Alternation of Shares

This comprehensive guide has provided you with key information to help you understand the Transfer of Shares in a Singapore company.

Need professional guidance? No worries! Feel free to contact our experts at Tianlong Services to learn more about transfer of shares.