Transfer of Shares for Singapore Companies
Transfer of shares in a private limited company is a procedure when a shareholder sells all or some of his shares to an individual or a company. In Singapore, shareholders may have multiple reasons to transfer their shares, such as raising funds for expansion, realising the value of their investment, bringing in a business partner, gifting shares to family members, or even due to the retirement or death of a shareholder.
Transferor vs transferee
All the same, it is important to follow appropriate procedures to endorse such transfers. The shareholder intending to sell their shares will be referred to as the “transferor”, while the shareholder intending to receive the transferred shares will be referred to as the “transferee”.
Documentation for Transfer of Shares
- Board Resolution
- Share Transfer Form
- Notice of Transfer
- Instrument of Transfer (shows that the transferor and the transferee agrees to the deal)
- Old share certificate (from which shares are being transferred)
- Share Certificate (the document which proves ownership of the shares)
- Letter of waiver of pre-emptive right (eliminates the first rights that existing shareholders have to any transferred shares).
- Inland Revenue Authority of Singapore (IRAS) stamp duty acknowledgement
Steps in Completing the Share Transfer
- Stamp duty needs to be paid on the share transfer form.
- ACRA lodgement for transfer of shares need to be made.
- Issuance of new share certificate and cancellation of old share certificate
- Updating register of members and register of transfers
Who Pays for the IRAS Stamp Duty Acknowledgement?
In contrast to the allotment of shares, which is overseen by the Accounting and Corporate Regulatory Authority (ACRA), when shareholders wish to transfer shares, they have to pay for the stamp duties to the Inland Revenue Authority of Singapore (IRAS). Stamp Duty should be paid by the transferee, and afterwards, a written transfer request is made to the directors.
If share transfers can only occur after board approval, the board should then consider whether approving the transfer would be in the interest of the company. As provided in s 128(1) of the Companies’ Act, a transfer request to the board of directors must be made in writing. However, whether the transfer request is being accepted or not will be subject to the restrictions on transfer of shares. Furthermore, company directors usually do not have the right to decline the transfer of shares from one shareholder to another.
The Instrument of Transfer is an official document that indicates that the transferor has agreed to transfer the shares and the transferee has accepted the shares. If the transferor and the transferee are individuals signing the Instrument of Transfer, a witness need to sign as well. However, if corporate entities are involved, a Common Seal from both corporate entities is usually affixed. You might need to amend the Instrument of Transfer if the transferor or transferee is a foreign entity. Ensure you discuss the same with your company secretary or legal counsel.
Issuance and Cancellation of Share Certificates
The Share Certificate is a legal document that represents ownership of the shares specified. The transfer of shares implies reissuing the Share Certificates. The old ones must be tendered and returned to the company for cancellation for the shares that were sold to the buyer. The issuance of the Share Certificate is authorized by the affixation of the company’s Common Seal.
ACRA Updates the Electronic Register of the Company’s Members
When a transfer of shares has occurred, your corporate secretary must file a notice of transfer of shares with ACRA using BizFile or report the transfer in the annual returns. The transfer is effective only when the electronic register is updated, as stipulated in section 126(3) of the Companies Act. This also applies where the transfer was made at the request of the transferor, per s 128(2) of the Companies Act.
Can Tianlong Services Help You?
Tianlong Services is a professional accounting and secretarial firm and a registered ACRA filing agent for company incorporation, lodgment of annual return and filing of changes and updates of company particulars, officers and shareholders.
Contact us today if you need help with transfer of shares for Singapore Companies.
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