Transfer/Sale of shares in a private ltd. company

jerryob

I set up a limited company 12 months ago, with my wife and I both as directors. Both of us have 50% ownership, each with 100 ordinary issued shares.

I am in the process of investing seed capital into the company, resulting in the issuing of 25,000 shares to me. I plan to look for external investment in early 2009, and have been advised that my wife's 100 shares will "pollute the share table", as it was put. You can imagine my wife's :mad: when I told her, but she's :cool: with it now....

So I need to correct my earlier mistake at company formation, to have the 25,100 issued shares in my name. I have scoured through the CRO, but cannot find an appropriate form. No joy either from my accountant . Anyone know how to transfer/buy the 100 shares from my wife?

antoinolachtnai

The accountant should be able to sort this out. This should be straightforward enough stuff. It only peripherally involves the Companies Office.

There may be a small amount of stamp duty involved to be paid.

It is a little hard to understand this business of 'polluting the share table'. I don't see a big issue here myself, if you own 25,000 shares, and she owns 100.

Make sure you are getting the best professional advice you can get.

Antoin.

elgransenor

jerryob wrote: »

I set up a limited company 12 months ago, with my wife and I both as directors. Both of us have 50% ownership, each with 100 ordinary issued shares.

I am in the process of investing seed capital into the company, resulting in the issuing of 25,000 shares to me. I plan to look for external investment in early 2009, and have been advised that my wife's 100 shares will "pollute the share table", as it was put. You can imagine my wife's :mad: when I told her, but she's :cool: with it now....

So I need to correct my earlier mistake at company formation, to have the 25,100 issued shares in my name. I have scoured through the CRO, but cannot find an appropriate form. No joy either from my accountant . Anyone know how to transfer/buy the 100 shares from my wife?

Jerryob,
There is no problem transferring your wife's shares to you.

You don't need to notify CRO as this will be done and reflected when you file your next Annual Return.

There will be no stamp duty as this will be a transfer of a subscriber's shares.

You do need to notify Revenue so that they are satisfied that there is no duty due(as opposed to the normal 1%) and you do this with form SD4 which you will get on Revenue.ie.

You need to execute the transfer in writing and you need to look at irishstatutebook.ie; statutory instrument 263/1996 and it lays out the format that your transfer form should take.
Essentially it will include
1)particulars of consideration
2)description of security/shares
3)number of shares
4)name and address of transferor
5)name and address of transferee
Thats it.
So type it up and make sure it is sealed with the company seal,advise your accountant prior to him making your next AR.

thecleverone

Hi Jerryob

As per the above posters comments, there is no CRO form available to transfer shares.

You will need to go to www.revenue.ie and download an SD4 form. You will need to send this to Revenue's stamping section along with a complete stock transfer form which you can buy from a legal stationers. The stamp duty on transferring 100 shares is only €1 but an assessment on the value of shares will need to be done by Revenue as you are husband and wife. This means you will need to send in a copy of the latest accounts to revenue along with SD4 and stock transfer forms to make sure the value of the shares is only €100.

Also, in relation to the issuing of 25,000 additional shares, make sure you have sufficient authorised share capital to do this. I.e. you will need to have a minimum of 25,200 authorised shares in the company (this will be noted in your memorandum & articles of association). As long as you have sufficient authorised shares, then its only a B4 form required from CRO to allott/issue the additional 25,000 shares. Be sure that you are going ahead with the seed capital scheme first, as if you issue these 25,000 shares, you cannot take them back and would be personally liable for this amount of money on winding up.

PM me if you have any Q's

jerryob

Thanks elgransenor and thecleverone. Great answers.

elgransenor,
I now understand that I need to send in a SD4 to Revenue for stamp reasons. Is the transfer form you suggest needed only for company records? Stat Instr 263/1996 mentions it needs to be "lodged with the Registrar/Stock Exchange". I'm a little confused.... And without informing the CRO, how will the share tables in the articles/memo of association get updated?

thecleverone,
Yes, I have enough authorised shares. BTW, it was a B5 form that's needed to issue new shares, not a B4. The B4 is needed to increase authorised shares. But, I'm sure it was only a typo.

The revenue assessment will be interesting.... I've put 7 months business planning into the company, so one could argue it has increased in value. I wouldn't be of that opinion, as I haven't attracted investment yet and am ~3 years off revenues, if lucky.

elgransenor

jerryob wrote: »

Thanks elgransenor and thecleverone. Great answers.

elgransenor,
I now understand that I need to send in a SD4 to Revenue for stamp reasons. Is the transfer form you suggest needed only for company records? Stat Instr 263/1996 mentions it needs to be "lodged with the Registrar/Stock Exchange". I'm a little confused.... And without informing the CRO, how will the share tables in the articles/memo of association get updated?

thecleverone,
Yes, I have enough authorised shares. BTW, it was a B5 form that's needed to issue new shares, not a B4. The B4 is needed to increase authorised shares. But, I'm sure it was only a typo.

The revenue assessment will be interesting.... I've put 7 months business planning into the company, so one could argue it has increased in value. I wouldn't be of that opinion, as I haven't attracted investment yet and am ~3 years off revenues, if lucky.

Yes,the share transfer form is for your internal housekeeping records.
When you are being audited or if you sell the company the due diligence that may be carried out will see that everything is kosher in terms of the share transfer.
The SD4 is for revenue and because the shares being transferred are those of a subscriber(ie one of the founders)there will be no stamp duty due but you need to fill out the form so that they can sleep easier at night.
The CRO will be advised when your AR is done;there is no obligation to advise them before then.

elgransenor

PS
Maintaining the share tables is the Co. Secretary's responsibility-she'll be delighted with you taking shares off her and then telling her of her additional statutory responsibilities.:mad:

thecleverone

BTW, it was a B5 form that's needed to issue new shares, not a B4.

Sorry - my bad. I was rushing when typing the answer but the B5 is the allotment of shares form alright.

jerryob

Thanks guys. Everything clear now. It's info like this that saves me hundreds by being able to do the transaction myself, without being milked by professional fees. Sure there's a time for the professionals to be brought in, but not when this detail is available (and when the company secretary works pro bono )

Thanks again.