Share Transfers: The process and the pitfalls
Date: 19/11/2025 | Corporate
Transferring shares in a private company seems like a fairly simple thing to do, so clients often decide to deal with it themselves. However there are pitfalls to be aware of, as getting it wrong can prove a costly mistake.
There is a clear process you need to follow if you want to transfer your shares, as well as some common mistakes to avoid along the way.
Check Articles
Check the articles of association of the company to see what the rules are in relation to the transfer of shares.
All shareholders are bound by the company’s articles of association, which can be found on the company’s public record at Companies House if you don’t have a copy to hand.
Sometimes shares are freely transferable, but often these include rules restricting who shares can be transferred to, so there is some control over who can become a member of the company. There may be a requirement to offer the shares to the existing shareholders before you transfer them to any third party. There may also be some permitted transfers where you don’t have to offer your shares to the other shareholders. For example, you might be permitted to transfer your shares to your spouse or children.
This will help you to understand whether you are able to make your proposed transfer, and if not, what steps you need to take to address any restrictions.
Check Shareholders’ Agreement
If there is a shareholders’ agreement in place in relation to the company, you should also check whether it contains any additional restrictions on share transfers. Often this will require the new shareholder to enter into a deed of adherence where they agree to be bound by all the provisions of the shareholders’ agreement.
Establish Ownership
Find your share certificate and check that the company’s register of members correctly shows you as the owner of the shares you want to transfer.
The register of members is the definitive record of who owns shares in the company, and as a member you have the right to see it. If you can’t find your share certificate, you should ask the company for a new one otherwise you may be asked by the company to provide an indemnity to protect it against claims for registering a transfer of shares without seeing your certificate.
Stock Transfer Form
Assuming you can make the proposed transfer, you need to fill in and sign a stock transfer form.
You will need to give details of the company’s name, the type and number of shares being transferred, as well as the amount being paid for them. The person getting the shares does not need to sign the form.
Depending on how much is being paid for the shares you may need to pay stamp duty. If more than £1,000 is being paid, then the duty is payable at 0.5% of the total consideration. There are some exemptions available – for example, where shares are gifted or left to someone in a will or transferred under a divorce settlement. In those cases, no duty is payable regardless of the value of the shares. If you need to pay stamp duty, the form needs to be sent to HMRC within 30 days of signing and this process can be done electronically.
Registering the Transfer
The signed and stamped transfer form needs to be approved by the board and the name of the new shareholder entered into the register of members. The company should then update your entry in the register of members to reflect the transfer and issue the new shareholder with a share certificate.
Avoiding mistakes
The steps sound pretty simple to follow, but there are some common mistakes that can often catch businesses out:
- Failing to sign a stock transfer form – sometimes companies just register the transfer with no paperwork to back it up which causes difficulties later on when evidence of title to the shares is needed.
- Failure to pay stamp duty – the company can’t legally register a transfer if the duty hasn’t been paid, meaning that no transfer has in fact taken place. Sometimes this is done in error which can cause issues because businesses or individuals think they have sold or acquired shares, but in fact they have not and the company’s register of member is incorrect, meaning any corporate actions taken are based on incorrect information.
- Failure to check or update the register of members – this can result in businesses and individuals trying to transfer shares they don’t in fact own or not in getting ownership of shares they think they have purchased.
Where can I get advice?
At Davidson Chalmers Stewart we are adept in advising on all of these issues and more.
Our Corporate Team is on hand to assist with the transfer shares in a private company or can also sort out any issues arising from transfers not properly completed.
Catherine Feechan is Senior Director with the Corporate Team at Davidson Chalmers Stewart with a wide range of expertise spanning joint ventures, mergers and acquisitions, equity investments, commercial contracts, corporate governance and risk management.
