Transfer of shares—law and procedure
Transfer of shares—law and procedure

The following Corporate guidance note provides comprehensive and up to date legal information covering:

  • Transfer of shares—law and procedure
  • Shares
  • Legal title and equitable title
  • The legal framework
  • Restrictions on transfer of shares
  • The procedure for transferring shares

There are a number of circumstances in which shares in a company may be transferred, eg upon a sale of the shares, through the transmission of the shares by operation of law (eg upon the death or bankruptcy of a shareholder), by gift or upon the enforcement of a charge. It is most common for shares to be transferred upon a sale. A sale of shares will normally take place pursuant to the terms of a share purchase agreement or an option agreement.

A company may also buy back its own shares. For further information on share buybacks, see Practice Note: Share buybacks—a quick guide.

This Practice Note focuses on the transfer of the legal title in certificated shares upon a sale that is not a share buyback.

The transfer of shares in a listed company, an AIM company or a company with securities that are traded on any exchange is outside the scope of this Practice Note.

Shares

Shares in a company can be issued as certificated shares or uncertificated shares and ownership of these shares is recorded in a company’s register of members (ie they are ‘registered shares’).

Previously, it was also possible for a company to issue unregistered bearer shares (sometimes known as 'share warrants to bearer' or 'share warrants'), which were owned by the person who physically held the bearer