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How to transfer company shares in Singapore
The transfer of shares in a Private Limited Company in Singapore is when a shareholder sells all or some of their shares to another party. The process for transferring shares needs to be done in accordance with the company’s constitution or in accordance with the procedures specified in Chapter 50 of the Singapore Companies Act.
Why would someone want/need to transfer their shares?
The most common scenarios for the transfer of shares are as follows:
- A shareholder leaves or retires.
- A director who is also a shareholder resigns or is removed from the company
- Transfer of shares between existing shareholders in terms of group reorganisation
- Changing the existing allocation of shares between shareholders because of new profit sharing or ownership arrangement
- Selling the company
- A shareholder wishing to sell their shares for a monetary gain.
Things to consider before transferring shares
It is important to consider the following key conditions before transferring the shares in a company.
These conditions are:
- Check for any limitations or restrictions on the transfer of shares in the company’s articles of association. In the event of a right of first refusal clause, the existing shareholders will have to sign a waiver of their rights to purchase the transferred shares.
- Review the company’s shareholders’ agreement for any limitations or restrictions.
- Ensure that the board resolution or general meeting resolution regarding the transfer has been passed.
What is the process for transferring company shares?
1. ‘Instrument of Transfer’
In order to start the process, a transferor has to execute a ‘Instrument of Transfer’ with the transferee. An instrument of transfer clearly states that a transferor and transferee have agreed to the transfer and accept the shares. The Instrument of Transfer may also contain additional information such as identifying which party is responsible for the payment of Stamp Duty.
Once the instrument of transfer has been finalised, the transferor has to submit a written request for the share transfer to the board.
2. Transfer request & board’s decision via board resolution
The board’s decision along with the reason behind this decision will be made and recorded in a board’s resolution. The board has 30 days to either approve or deny the request for transfer. Should the board reject the proposal, they must send a written ‘Notice of Refusal’ to the transferor and transferee.
3. Payment of Stamp Duty
The transferor (of shares) and the transferee have to determine who is going to pay the ‘Stamp Duty’. As mentioned above, this information could also already be agreed in the Instrument of Transfer. Once a decision has been made, the Stamp Duty must be paid within 14 days after the execution of the Instrument of Transfer.
Please also note that the Share Transfer Form also needs to be submitted to IRAS (Inland Revenue Authority of Singapore).
4. Surrender of the original share certificate
Once the share-transfer has been approved by the board, the transferor is required to surrender the original Share Certificate (for cancellation or rectification) to the company. The transferor must surrender the share certificate within 7 to 28 days after making a request for the written share transfer.
5. Updating by ACRA & Issuing of New Share Certificate
The share-transfer will be finalised once ACRA updates the electronic register of the company members. Once this has been completed, the company can issue a new Share Certificate to the transferee within 30 days of registering the share-transfer with ACRA.
What are the required documents for transferring shares?
- Board Resolution
- Notice of Transfer
- Instrument of Transfer/Share Transfer Form
- Share Certificate (a document that attests to the ownership of the shares)
- Share Transfer Form
- Stamp duty acknowledgement by IRAS (Inland Revenue Authority of Singapore)
How can our team of experts help?
If you need more information about transferring your company’s shares in Singapore, you can book a consultation with one of our experts. This consultation will allow you to receive dependable advice and quickly figure out the best option for your particular needs.
Please note that this article is for information purposes only and does not constitute legal advice.
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