Transferring Shares in a Singapore Pte Ltd Company

Transferring shares in a private limited (Pte Ltd) company is a common occurrence, driven by various reasons such as changes in ownership, fundraising, or personal decisions. It’s essential to understand the proper procedures and legal requirements involved in share transfers to ensure any transfer of shares will need to be in compliance with the company constitution.

Step-by-step process of transferring shares in a Private Limited company in Singapore

Understanding Share Transfers: Before diving into the transfer process, it’s crucial to grasp the fundamentals of share transfers. Share transfers involve the sale or transfer of ownership of shares from one shareholder (transferor) to another (transferee).

This process must adhere to the constitution, be filed with the Accounting and Corporate Regulatory Authority (ACRA), and incur stamp duty fees paid to the Inland Revenue Authority of Singapore (IRAS).

Essential Documents

Several crucial documents are required to initiate and complete a share transfer:

• Instrument of Transfer: This document formalises the agreement between the transferor and transferee, outlining the transfer of shares.
• Notice of Transfer: A notice notifying the company of the share transfer.
• Board Resolution: A resolution passed by the company’s board of directors, approving or disapproving the share transfer.
• Share Certificate: A document proving the ownership of the shares being transferred.
• Share Transfer Form: A form that needs to be completed by both the transferor and transferee, indicating their consent for the share transfer.
• IRAS Stamp Duty Acknowledgment: Proof of stamp duty payment to IRAS.

Before Initiating the Transfer

Before proceeding with the share transfer, there are several important considerations:

• Basis of the Transfer: Clearly define the basis of the transfer, including the sale price and any specific conditions. Consider seeking legal advice if needed.
• Company-Level Restrictions: Check the company’s constitution for any restrictions on share transfers. Some companies require board approval for transfers.
• Pre-Emption Rights: Determine if pre-emption rights apply, which may require offering shares to existing shareholders first. The provision is documented in the company’s Memorandum and Articles of Association.

Initiating the Share Transfer

Once all considerations are addressed, proceed with the following steps:

• Execution of Instrument of Transfer: Both the transferor and transferee must execute the Instrument of Transfer to formalise the agreement.
• Making a transfer request to the board:  The board has 30 days to approve or deny the transfer.
• Payment of Stamp Duty: Stamp duty must be paid within 14 days of executing the Instrument of Transfer. Parties involved should agree on who bears this cost.

After Board Approval

If the board approves the transfer:

• Surrender of Share Certificate: The transferor must surrender the original Share Certificate to the company for cancellation or rectification.
• Updating Electronic Register: The company must update its electronic register of members with ACRA.
• Issuing a New Share Certificate: The company must issue a new Share Certificate to the transferee within 30 days.

Share Certificate

After the successful transfer of shares within a company, the Share Certificate plays a crucial role in confirming ownership. It is the responsibility of the company secretary to oversee this process:

• Transferor surrenders their existing Share Certificate to the company secretary, who then proceeds to cancel it.
• In cases where the transferor still holds shares in the company post-transfer, the secretary may issue a new Share Certificate to reflect their updated ownership.
• Subsequently, a new Share Certificate is prepared and issued to the transferee, indicating their ownership rights.
• The company secretary updates the company’s registers to maintain accurate records of share ownership and files the application form with ACRA, completing the official transfer of shares within the company.

Summary

Transferring shares in a private limited company in Singapore involves a well-defined process to ensure legal compliance and transparency. By hiring an experienced Singapore company secretary services provider, you can ensure a smooth and valid share transfer process.

Time is money. Let the pro team at Counto take care of your compliance. Speak to us directly on our chatbot, email us at [email protected], or contact us using this form.

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