Share Transfer Service in Singapore
The shareholders of a company can choose to sell or transfer their shares at any time. However, it has to be as per the constitution of the company. The transfer of shares in Singapore also has to be as per the procedures laid down by the regulating authorities.
The share transfer generally involves directors’ resolution, the transferor (seller) and transferee (buyer), execution of the ACRA transfer of shares form. It also involves paying of accurate stamp duty, notice of transfer of shares, the filing of the list of shareholders with ACRA, and updating of the electronic register of members in the case of private companies. You may need an experienced company secretarial services in Singapore to take care of the task.
There could be a variety of reasons behind the ACRA transfer of share. The shareholders may choose to sell their shares because they have
- A minority stake in the company and are now trying to realize the value of their investment
- Got the shares as part of an employee share scheme and company wants them to sell before moving on to another job
- Plans to expand the company. The founder of the company may choose to sell a part of their shares to investors to raise the capital or to exit the company completely.
It goes without saying that you need to back your transfer of shares in Singapore with proper documentation.
Individual & Corporate Shareholders
Documentation for the share transfer differs depending on whether the transferor and transferees are individuals or corporations. First of all, one of the directors of the company has to inform the seller, if there are any restrictions on the transfer of shares.
ACRA transfer of shares needs the Directors’ Resolutions in Writing and Certificate of Appointment of Corporate Representative. These documents authorize the board to appoint a corporate representative to act on the company’s behalf and to sign on all documents relating to the transfer. The corporate shareholders also approve the use of the Common Seal.
If one of the party to the transfer of shares cannot use Common Seal to validate the document, the wording of the relevant documentation should reflect the circumstances.
In the case of individual shareholders who cannot put their sign on the required documentation, the company has the alternative of preparing a Proxy Form. Using it, the shareholders can appoint a proxy to sign on their behalf.
The pre-emptive rights mean that if the company’s shares are being transferred, its existing shareholders will have the first rights to buy them. The company’s Memorandum and Articles of Association documents such a provision.
DRIW to Note the Purchase/ Sale/ Acceptance of Shares
Directors’ Resolutions in Writing to note the purchase, sale or the acceptance of shares and authorize the use of the company’s Common Seal on any share transfer documents.
If transferor and transferee signs an agreement (e.g. a Sale and Purchase Agreement, Loan Agreement or Joint Venture Agreement), a copy of the said agreement is added to the Directors’ Resolutions in Writing (DRIW).
The DRIW can also authorize a specific individual, a director or an employee of the company, to act on the company’s behalf to negotiate the said agreement or terms of the transfer.
The DRIW may also document the appointment of a legal counsel or financial consultant to advise the company on the terms of the agreement. It may also authorize the company secretary to make the relevant lodgement with ACRA and pay the stamp duty to IRAS on the company’s behalf.
Instrument of Transfer
The Instrument of Transfer is an official document signifying the transferor’s agreement to transfer and the transferee’s agreement to accept the shares. A witness is also required to sign the document as well. If the corporate entities are signing the Instrument of Transfer, they need to use Common Seal and authenticate the document.
If the transferor or transferee is a foreign entity, the Instrument of Transfer may be required to be amended.
Working Sheet for Transfer of Shares
The company will need to prepare the Working Sheet based on its latest audited accounts, or the latest management accounts. It is a document related to the transfer of shares demanded by IRAS.
The Working Sheet comes handy in determining the stamp duty for the shares transferred. The duty is calculated based on the purchase price or market value of the shares transferred, whichever is higher. The sheet contains information about:
- Total assets
- Total liabilities
- Total number of issued shares
- Number of shares transferred
The company secretary is charged with the issuing of Share Certificates. It is a legal document that denotes the ownership of the shares specified. The issuance of the Share Certificate is authorized by the affixation of the company’s Common Seal.
Following are the steps in the transfer of shares:
- The transferor (Seller) hands over his or her Share Certificate to the company secretary
- The company secretary will cancel the transferor’s share certificate
- The secretary may issue a new Share Certificate if the transferor will continue to hold shares in the company even after to the transfer
- The company secretary will prepare and issue a new Share Certificate to the transferee
- The company secretary will update the company’s registers
- The company secretary will make the relevant lodgement of ACRA filing for transfer of shares