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.

See 12.2.4 for an explanation of the calculation of stamp duty on share transfers.

There may be a number of possible reliefs, which may help reduce HM’s liability to CGT, notably entrepreneurs’ relief and her annual exemption. See chapter 22 for further details.

The procedure to apply for the registration of a purported transfer will be set out in the company’s articles; normally the transferee will be required to submit both a stock transfer form and the transferor’s share certificate for consideration by the board.

The Company’s articles permit transfers to existing members OR family members of existing members – proposed transferees, therefore, do not have to fall into both categories.