Chapter 13: Share Registration

Question 1

What form must be completed to transfer shares?

Answer 1

Stock transfer form J30

Question 2

Why is forged transfer insurance important?

Answer 2

Because it is not always possible to recover losses caused by forgery.

Question 3

When might a company refuse to register a transfer?

Answer 3

If it knows that the transferee is:

• an infant
• a person of unsound mind
• a bankrupt
• an entity other than a body corporate

Question 4

Does a stock transfer form need to completed for transmission of shares?

Answer 4

No (only for transfer)

Question 5

What does s 773 CA allow regarding death of a member?

Answer 5

An instrument of transfer may be executed by a personal representative on behalf of a deceased person.

Question 6

What does s 774 CA state as sufficient evidence of authority to transfer a deceased member’s shares?

Answer 6

Any document that is by law sufficient evidence of grant of probate.

Question 7

Whats actions should the CoSec carry out when administering the death of a member?

Answer 7

• check the name on probate matches that on register of members
• check whether deceased has more than one shareholding
• check any other matter that could affect share transmission (e.g. recent bankruptcy)
• check share certificate has been returned, or ask for it
• annotate the register of members and share certificate to note the death
• stamp probate and return to the person who lodged them

Question 8

If a deceased member’s representative wishes shares of less than £5000 be transferred to them, without notice providing proper notice, what documents must they provide?

Answer 8

• death certificate
• share certificate
• statutory declaration stating the claimants relationship to the deceased and the reasons for claiming the shares
• a letter of indemnity

Question 9

What happens in the event of death of a joint shareholder?

Answer 9

Ownership passes to the surviving shareholders. E.g. the second named holder becomes the first etc.

Question 10

How soon after issue or transfer of shares must the company issue a share certificate?

Answer 10

2 months

Question 11

Which is the definitive evidence of shareholding, the share certificate or the entry in the register of members?

Answer 11

The entry in the register of members. The share certificate is prima facie evidence.

Question 12

Why do the listing rules require that share certificates show the number of shares twice, in two different forms (e.g. words and numbers).

Answer 12

To prevent fraud.

Question 13

What is the procedure for the CoSec on notification of a lost share certificate?

Answer 13

1 Make a note on the register
2 Ask the member to execute an indemnity to protect the company against fraud.
3 On receipt of indemnity, issue a duplicate certificate (marked “duplicate”)
4 Put the details of the original certificate on the stop list to help identify fraud
5 Ask the member to return the lost certificate if subsequently found

Question 14

What is meant by “certification” concerning shares?

Answer 14

The process to split shares represented in a single certificate.

Question 15

What is the procedure for “certification”?

Answer 15

1 Member lodges the share certificate and transfer form with the company
2 Company endorses the transfer form and returns it to the member (while retaining the share certificate)
3 Company issues two new certificates.

Question 16

What procedure should the CoSec follow when receiving notice of power of attorney?

Answer 16

1 Check the power has been executed properly
2 Check for a match between the donor of the power and the registered shareholder
3 Check the power is original, or a certified copy.
4 Take a copy for records
5 Check whether the power is joint between more than one person, and ask whether they must act jointly, or jointly and severally
6 Note when the power comes into effect/expires
7 Stamp with the company’s registration stamp and return to sender

Question 17

What is the effect of a “stop notice” court order?

Answer 17

Instruction from the court preventing the company accepting any transfer from the person named in the notice for a period of 14 days.

Question 18

What is the effect of a bankruptcy court order?

Answer 18

Shares are vested in a trustee following bankruptcy. All communication from the company should be directed to the trustee, rather than the member,.

Question 19

What is the effect of a protection court order?

Answer 19

A receiver is appointed to manage the income of a person deemed incapable due to mental disorder. All correspondence should go the the receiver.

Question 20

What is the effect of a liquidation court order?

Answer 20

A member who is a company is being wound up. The company whose shares are held requires copies of the court order.

Question 21

What is the effect of a charging court order?

Answer 21

Shares are charged for the benefit of a member’s creditors.

Question 22

What is the effect of a vesting court order?

Answer 22

The court orders a change of owner of shares, usually in the case of removing a trustee.

Question 23

What is the effect of a third party debt order?

Answer 23

Dividends are applied for the benefit of the shareholder’s creditors.

Question 24

What steps should the CoSec follow on receiving a court order relating to a member?

Answer 24

• check document received is an original or office copy
• check court order details against register of members
• review scope of powers under the court order
• check the dates of the order
• make a note on the register of members

Question 25

What steps should a company take to become eligible to use CREST?

Answer 25

1 Pass a board resolution to make securities eligible for CREST (overriding any prohibitive terms in the articles)
2 Give notice of the board resolution to every member within 60 days
3 File a copy of the resolution with the Registrar within 15 days

Question 26

What is the role of the Registrar in relation to CREST?

Answer 26

To reconcile transfers within CREST with those of the registrar. i.e quickly responding to CREST transfers and daily reconciliation of CREST holdings and Registrar entries.