Let’s face the truth that is right here in front of our eyes; the business world is a difficult place to be working in. Things are becoming simpler with the advent and the increased use of the internet, but some things are still tough and incomprehensible. Nothing is just completed as more and more hoops need to be jumped to accomplish the smallest thing. There are many challenges which startups , small businesses faces when it comes to accounting and in stock transfer form.
What is a Stock Transfer Form (J30)?
A stock transfer form is also known as J30. It is the standard document that is required in the United Kingdom for the legal transfer of shares . It is a detailed form containing the information of both the buyer and the seller, the type of the shares being transferred as well as the number of shares being transferred between the parties. One thing that needs to be remembered is that while the J30 form may be used to transfer shares, they are only valid for shares whose amounts have been fully paid up. Shares, where payment is still due, can only be transferred through a J10 form.
The first step to complete the share transfer process is to complete the Stock Transfer Form. One thing that should be remembered while filling in the Stock Transfer Form is that the form should be filled in with BLOCK LETTERS, and in black ink as this is the acceptable format for this sort of form.
The following is a guide describing how to fill each part of the Standard Stock Transfer Form to complete it entirely without any error. After the form has been filled in and filed, it depends on the company to see if they accept the proposed transfer. Once they accept the transfer, details from the Stock Transfer Form will need to be recorded by the company.
What are the things that need to be entered into a Stock Transfer Form?
A Stock Transfer Form has a large number of things that need to be entered to make it a valid transfer of shares from the holder to the person proposing to hold it. The following are the information needed.
- Type of Money Transaction:
The first thing that needs to be remembered and entered when any transfer takes place is the mention of the consideration for which the transfer is agreed upon. If the transfer is on the basis of cash, then the amount which is exchanged for the exchange of shares has to be entered. This entry is the consideration of the sum required for the shares. If there is no consideration involved in the transfer of shares, then it needs to be mentioned next to the Consideration that the amount is “NIL.”
- Name of Undertaking:
Here the full name of the undertaking or company in which the shares are held has to be entered. The entire name should be entered as this is an important detail that cannot be omitted.
- Description of the shares in detail
Here the class or type of share being traded has to be entered. Here, it is essential to describe in detail every minute detail about the shares that are being transferred. Whether they are ordinary shares or preference shares has to be mentioned in this very slot. In the case of shares, the nominal value of the shares must also be mentioned here. The description can usually be found on the share certificates you possess which cover the ownership of these shares.
A share certificate usually contains the following information:
- A unique share certificate number
- The company’s name and company’s registered number.
- The registered office address of the company.
- The name of the shareholder.
- The address of the shareholder.
- The number of shares covered by the share certificate.
- The type or class of shares.
- The extent to which the shares are paid up (In case of a J30 form they are fully paid up).
- The nominal value of the shares.
Here the number of shares of securities that are being moved have to be written. This should be written with numbers as well as words, in the same manner in which a cheque is filled up. If shares or stock are packaged into units or blocks, it is important to specify the number of units in the box to the right. In cases where the number of shares or stock units on the certificate exceeds the amount being transferred, a balance certificate will be issued.
In this slot, the names of the current shareholder or, for a joint shareholding account or fund, the names of all the joint shareholders should be included. There is a requirement to enter only one registered address and not more. The one address that is to be entered, for a joint shareholding, should be the address of the first named joint shareholder. In case of a single shareholder, the holder’s address has to be entered.
If someone other than the named shareholder is transferring the shares, it is important to write the capacity in which they are signing the stock transfer form. For a deceased shareholder, the full names of the legal personal representative should be included.
What needs to be noted here is that a transfer by the legal representative will not be processed if the Grant of Representation has not been registered. The details are extremely important here as all these information are recorded by the company.
The ‘Account designation’ box is optional and only needs to be completed if there is a specific account designation or reference attached to the existing shareholding. Otherwise, it can be ignored and kept empty.
A signature of the person who is transferring the shares is required in this slot. This slot usually contains the signatures of the seller or sellers in case of joint holders where all joint holders need to sign to transfer a joint holding of shares; there are a few instances where someone else may sign stock transfer forms here. The exceptions are listed below and should be kept in mind.
- The legal personal representative or representatives in case of more than one should sign on behalf of the estate of a deceased shareholder. This is the usual norm followed in the case of the deceased holder.
- In case there has been a power of attorney, which was previously registered with the company, then the attorney may be able to sell on behalf of the seller.
- In the case of a corporate shareholder registered in England, Wales or Northern Ireland, there is the requirement of a combination of officers connected to the company to sign. Each needs to state the capacity in which they are signing, and that they are signing for the company and that they are signing on behalf of the company. The following are the officers who are qualified to do this:
- Two directors of the company.
- One director and the company secretary
- One director and a witness, who must also state their name and address for the record.
- Two authorized signatories.
The combinations required will be different if a company seal is applied. It is also required to enter the date that the transferor or transferors in case of more than one, or another person arranging the transfer on their behalf, has signed the stock transfer form.
In this slot the details of the person in whose name, or persons in whose names, in case there are more than one, the shares are to be registered needs to be entered. For proposed joint shareholdings, this should include the name of each joint shareholder, who is to be a part of that. In case of address, however, only the address of the first named shareholder should be entered. It is this address to which all the correspondence in respect of the shares will be sent.
It is often the goal to register the shares in the name of a company, or any other entity, instead of an person. However, transfers are usually only to be registered if the receiving party is a public limited company, private limited company, incorporated under Royal Charter, incorporated by special act of Parliament or under applicable foreign company law. This will mean that, in many cases, shares will be transferred to the underlying individuals or trustees involved with a charity, trust, association, or club rather than to the entity itself. So it is the individuals who become the joint holders of the shares instead of the entity to which they are affiliated.
The ‘Account designation’ box only needs to be completed if the shares are now to be held under a specific account designation or reference. If this is not the case, then the Account Designation box can be kept empty without any problem at all.
If the new shares are to be sent to any individual instead of the first named person who is the receiver of the shares on the form, then the name and address of the person should be inserted here. Often the shares are sent to other locations which may be more apt according to the need of the shareholder. One important fact to be noted is that any posted share certificate is posted with the shareholder the one at risk.
Certificate 1 of stock transfer forms should be filled in, when and if the money paid for the transfer is £1,000 or less. If this is the case, so long as the certificate is fully filled in, there will be no stamp duty due.
Certificate 2 of the stock transfer form should be completed in the following scenarios where stamp duty is not chargeable:
- Shares received as a gift, and that is not paid any consideration for.
- Shares received from spouse or civil partner when a marriage takes place, or a civil partnership is entered into.
- When shares are transferred as security for a loan.
- Shares that were held as security for a loan that are now transferred back when the loan has been repaid.
- Shares held in trust when they are transferred from one trustee to another.
- Any transfer made by a liquidator as settlement to shareholders when a company is wound up.
However, if any of these conditions apply and the consideration for the shares is stated as nil on the front of the stock transfer form, neither certificate needs to be completed. In that case, the stock transfer form does not need to be sent to HMRC and there will be no stamp duty to pay.
Some transactions are exempt from stamp duty and also covered by Certificate 2. You should, therefore, complete this certificate if:
- In case shares are left as a part of the Will.
- In case shares are transferred if a divorce takes place or if the civil partnership is dissolved.
- In case, exempt stocks such as loan notes, permanent interest bearing shares, or debentures are securities which are being transferred. Where these exemptions apply and Certificate 2 has been fully completed, the stock transfer form neither needs to be stamped or sent to HMRC; there will be no stamp duty payable at all.