How to Transfer Shares in a Limited Company

Transferring shares in a limited company is a common event in the life cycle of a business. Whether it’s bringing in a new investor, restructuring ownership, or a shareholder wishing to exit, knowing how to transfer company shares correctly is essential.

In the UK, the process is governed by the Companies Act 2006, a company’s Articles of Association, and any Shareholders’ Agreement in place. Getting it wrong can lead to disputes, rejected filings, or even tax complications. This guide will take you step-by-step through everything you need to know.

Why Would Shares Be Transferred?

There are many reasons why shareholders may wish to transfer their shares, including:

• Selling shares – a shareholder may wish to sell their holding for personal or business reasons.
• Succession planning – family-owned companies often transfer shares to the next generation.
• New investment – introducing new investors into the company’s structure.
• Exit strategy – when a founder or director leaves the business.
• Restructuring – consolidating ownership or redistributing shares among existing members.

Each scenario has different tax, legal, and strategic implications, making professional guidance critical.

The Legal Framework for Share Transfers

Before you transfer any shares, you must check the following documents:

1. Articles of Association – These set out the company’s internal rules. Many private limited companies restrict share transfers and may require directors’ approval.
2. Shareholders’ Agreement – This often contains pre-emption rights (giving existing shareholders the first opportunity to buy shares before they’re offered to outsiders).
3. Companies Act 2006 – Provides the overarching rules governing share transfers.

If restrictions exist, they must be followed strictly, otherwise the transfer could be invalid.

Step-by-Step: How to Transfer Company Shares

Here’s the process typically followed in the UK:

Review Company Documents

• Check the Articles of Association and Shareholders’ Agreement for restrictions.
• Identify whether board or shareholder approval is required.

Obtain Board Approval

• Most transfers require board approval.
• The directors will review the request and either approve or refuse (in line with the Articles).
• A board resolution is usually recorded in the company’s minutes.

Complete a Stock Transfer Form (J30)

The Stock Transfer Form (Form J30) is the official document used for standard transfers.

It includes:

• Name of transferor (seller).
• Name of transferee (buyer).
• Number, class, and type of shares.
• Consideration (price paid).
• If shares are being transferred as a gift, this must also be stated.

Download HMRC’s Stock Transfer Form J30 here

Pay Stamp Duty (if applicable)

If the consideration exceeds £1,000, Stamp Duty at 5% applies.

• Payment must be made to HMRC within 30 days of signing the stock transfer form.
• HMRC will then “stamp” the form to confirm payment.
• If under £1,000, no Stamp Duty is due, but the form still needs to be completed.

More info: HMRC – Stamp Duty on Shares

Issue Share Certificates

• Once approved, the company must issue a new share certificate to the transferee.
• The transferor’s old certificate is cancelled.
• This should be done within two months of the transfer.

Update the Statutory Registers

• The company must update its Register of Members (statutory record of shareholders).
• This is a legal requirement under the Companies Act 2006.

Notify Companies House (If Required)

Unlike allotment of new shares, transfers themselves are not automatically reported to Companies House.

However, when the next confirmation statement is filed, the new shareholder information must be included.