Allotment and transfer of shares Flashcards
What is a private company limited by shares prohibited from doing?
Offering its shares to the public - however, offers can be made to existing shareholders, employees, and certain family members, as well as under an employee’s share scheme.
What is the purpose of a Prospectus?
To give investors details about the company and the investment, allowing them to assess the financial status and rights attached to shares.
Is a Prospectus usually required for a private company?
No, a private company does not usually need a Prospectus.
What are financial promotions?
Invitations or inducements to engage in an investment activity.
Are financial promotions allowed by private companies?
Prohibited unless within an exception or approved by an authorised person.
True or False: A Prospectus is always required for private companies.
False
What information does a Prospectus contain for investors?
Details about the company, financial status, and rights attaching to shares.
What happens to shares on death?
Shares go to Personal Representatives (PRs).
What happens to shares on bankruptcy?
Shares go to trustees.
How may shares be transferred?
Shares may be transferred by way of sale or gift.
What power do directors have regarding share transfer?
Directors have the power to refuse to register shares if they suspect it is fraudulent.
What is the instrument of transfer for shares?
A stock transfer form.
When does beneficial title pass?
Beneficial title passes on execution of the form.
When does legal title pass?
Legal title passes when the member is entered into the register and issued a new share certificate.
What is required for stamp duty on a stock transfer form?
The stock transfer form must be stamped before the new owner can be registered as the holder of shares.
What is the current rate of stamp duty?
Stamp duty is currently payable at 0.5% of consideration, rounded up to the nearest £5, and is only payable if consideration is £1,000 or more.
