Fact pattern

Helena Manzoor (“HM”) was one of the founders of Contemporary Kitchens Limited (“the Company”). She has now decided to retire from the Company. Accordingly, she will formally resign as a director and will sell her shares at market value to the remaining shareholders in the company. The Company’s articles contain the following provision:

“The directors may decline to register a transfer of any share which is not to an existing member of the company or not to a family member of an existing member of the company or which is of a share which is not fully paid or over which the Company has a lien.”

Section 1(1) of the Stock Transfer Act 1963 permits the use of a stock transfer form (as detailed in Schedule 1 of that Act) as a method of transferring shares – see 12.2.3.

See the Appendix to Chapter 12 for information on the contents of a stock transfer form. Note that it is not possible to use a “composite” form, so each transfer to each transferee must be documented separately.

The question refers to the buyers of the shares; as such, they are acquiring, rather than disposing of a capital asset. The contrary is true in respect of HM.