What formalities are required in order to document a transfer of shares, including any local transfer taxes or duties?

Mergers & Acquisitions (2nd edition)

Hong Kong Small Flag Hong Kong

An instrument of transfer would normally be required for a transfer of shares of an Offshore Entity. Hong Kong stamp duty may be applicable for transfer of shares registered at a Hong Kong branch share register of an Offshore Listing Vehicle.

Austria Small Flag Austria

The transfer of shares in limited liability companies needs to be executed in the form of a notarial deed and therefore an Austrian notary public (or a notary public subject to a comparable regime, such as a German notary public) has to be involved. Furthermore, shareholders of limited liability companies are registered with the Austrian commercial register. Changes have to be reported to the competent Commercial Register Court without undue delay, whereby the registration with the commercial register generally is only declarative and thus does not prove ownership. The notary fees typically depend on the purchase price.

The shareholders of joint stock corporations are not registered with the Austrian commercial register, but the owners of registered shares have to be registered with the share register of the company.

For each registration or change made in the commercial register, application fees have to be paid to the Commercial Register Court, whereby such fees typically are fixed at comparably low amounts.

In addition, regarding asset deals, the new owner of real estate has to be registered with the land register, whereby a fee for the land register registration (Eintragungsgebühr) as well as a real estate transfer tax (Grunderwerbsteuer) under the Real Estate Transfer Tax Act have to be paid.

As to share deals regarding a target that owns real estate, the real estate transfer tax (and no fee for the land register registration) has to be paid. However, the tax under the Real Estate Transfer Tax Act is only payable if the purchaser (alone or together with its affiliated companies pursuant to Section 9 of the Austrian Corporate Tax Act or through a fiduciary relationship) acquires more than 95% of the shares in the target company.

For asset deals, in principle value added tax has to be paid. Share deals are exempted from value added tax.

The Stamp Duty Act provides that certain contracts as well as contracts which contain certain provisions (e.g., suretyships, pledge agreements, assignment agreements, rental agreements) trigger stamp duty amounting to a percentage of the concrete consideration.

Regarding public bids, fees to be paid to the Takeover Commission depend on the transaction volume of the takeover.

United Kingdom Small Flag United Kingdom

In a private M&A deal the parties will enter into a sale and purchase agreement. For public M&A transactions the offer document and form of acceptance or the scheme of arrangement will be used but in the case of both public and private transactions, transfers of title to shares in a company incorporated in England and Wales must be made using a stock transfer form unless the shares in question are held in uncertificated form through the electronic CREST system.

The stock transfer form used is usually the form prescribed by the Stock Transfer Act 1963 but a company's articles may permit the directors to approve any form of transfer. Where a transfer is effected through the electronic CREST system, this is achieved through a transfer instruction being submitted through the electronic CREST system.

A stock transfer form will need to be stamped by, and stamp duty paid to, HMRC before the transfer of shares can be registered in the books of the target company. Due to the requirement to submit stock transfer forms to HMRC for stamping, there will typically be a time gap between completion of the transaction and the date on which the buyer is registered as the legal owner of the shares acquired. Stamp duty applies on the transfer of certificated shares unless the consideration for the transfer is £1,000 or less, or another exemption applies (for example, companies whose shares are listed on a recognised growth market like AIM). Stamp duty is currently payable at the rate 0.5% of the consideration paid for the shares, rounded up to the nearest multiple of £5.

Bulgaria Small Flag Bulgaria

The share transfer agreement with respect to a limited liability company must be in writing, with notary certification of the content and the signatures of the parties. The share transfer must be registered with the Commercial Register.

Materialised shares are transferred by way of endorsement for transfer and the transfer must be entered into the shareholders’ book of the target company. The transfer of dematerialised shares must be registered with the Bulgarian Central Depository. Bearer shares must be physically handed over to the acquirer. In most cases, a preliminary share purchase agreement is signed in writing.

Colombia Small Flag Colombia

The formalities required to legally document a transfer of shares, depends on the type of company.

In corporations (sociedades anónimas) and simplified corporations (sociedades por acciones simplificadas), the transfer of shares must be registered in the stock ledger of the company. This registration is performed by the company's legal representative pursuant to an instruction of transfer issued by the seller or the due endorsement of the relevant share certificates.

In limited liability companies (sociedades de resposabilidad limitada) the transfer of quotas is formalized by amending the company´s by-laws, which requires (i) board of partners' minutes authorizing the by-laws amendment; and (ii) granting of a public deed before a notary public whereby the amendment of the by-laws is contained. The amendment of the by-laws must be registered with the Chamber of Commerce of the main domicile of the target company.

With respect to taxes, no transfer taxes arise if the sale of shares is made through a private document, for example in cases of corporations and simplified corporations. If a public deed is issued for the sale of quotas, the transfer taxes are:

  • Registration tax: 0.7% over the total purchase price.
  • Notary rights: 0.3% over the total value of the transfer plus the rights of drafting the public deed (which vary depending on the number of pages and documents), plus VAT at a 19% rate.

France Small Flag France

French law does not require a written deed of sale in connection with a transfer of shares: the transfer of ownership of the shares is carried out by an account to account transfer. For evidentiary reasons, however, it is strongly recommended that the transfer be recorded in writing, stating the characteristics of the transaction.

The transferor must then notify the transfer of shares to the company with the deed of sale or by a movement order containing the information the date of the transfer, the account of the transferor to be debited, the number of shares transferred in full and in figures, the nature of the shares transferred, identification of the holder of the transferee's account to be credited or to be created. The company then registers the purchased shares in the buyer's account and updates the transaction log.

Transfers of shares are subject to registration fees: the purchaser must register with the tax authorities any deed drawn up, or a form n°2759 if applicable, within one month of the signature of the deed or the completion of the sale and pays the registration fees on the transfer of the shares. Lastly, on the capital gain earn from the sale of its shares, the transferor is subject to social security contributions at a rate of 17.20% and income tax.

New Zealand Small Flag New Zealand

The transfer of shares in New Zealand is relatively straightforward and simply requires the execution of a share transfer form, which is then recorded in the company’s share register. It is not common for share certificates or other bearer instruments to be issued to shareholders. There is no stamp duties or similar taxes that apply to transfers of shares in New Zealand.

Egypt Small Flag Egypt

Any transfer of unlisted shares must be effected through the EGX and the transfer of ownership is evidenced by EGX transfer certificates. As for listed shares, account statements are issued by Misr for Central Clearing, Depository and Registry.

Transfer of quotas of limited liability companies is evidenced by registering such transfer in the Quotas Ledger of the company.

Transfer of quotas and unlisted shares is subject to a capital gains tax at a rate of 22.5% on the net realized capital gain, which is calculated based on the difference between the acquisition price and the disposal price of such quotas/shares (whether through sale, swap or any other form of disposal). Further, recently the transfer of listed and unlisted shares has become subject to stamp duty taxes.

Cayman Islands Small Flag Cayman Islands

There is no transfer tax or duty in the Cayman Islands in connection with the transfer of shares in a Cayman Islands company. It is typical that the contractual agreement pursuant to which the share transfer is taking place is produced to the Board of the company which issued the securities. The Board will then instruct the relevant person to update the register of members of the company (at which time the transferee will become the legal holder of such shares in the company).

Italy Small Flag Italy

There are two ways to document a transfer of shares in an Italian joint stock company:

a) Under Art. 2355 of the Italian Civil Code, transfer of shares can be executed through an endorsement notarised by a notary or by another person under special law provisions. The endorsee who can prove to be the holder of the shares on the basis of an uninterrupted series of endorsements has the right to obtain registration of the transfer in the shareholders’ register and has the authority to exercise every corporate right. This method is the most commonly used.

b) Under Art. 2022 (“transfer” in Italian legal terminology) it is also possible to document a transfer of shares by executing a notary deed of transfer and handing over the share certificate and indicating the name of the acquirer on the certificate and in the shareholders’ register (alternatively, a new certificate can be issued with the name of the new shareholder). This substitution of the shareholders’ name is carried out by the issuer (or by the transferor at its request). If the company has not issued share certificates, it is not necessary to hand over anything and the transfer, always after having executed the notary deed of transfer, takes place by simply registering the name of the new shareholder in shareholders’ register.

The transfer of dematerialised shares, which, for Italian listed companies, is maintained by Monte Titoli S.p.A., takes place by book entries in a centralised management system.

To document a transfer of shares in limited liability companies, the parties must execute a deed of transfer authenticated by a notary. To make the transfer effective toward the company the deed of transfer must be registered with the companies’ register.

With regards to transfer tax and duties requirements in the context of an acquisition transaction, the situation differs depending on whether the target company is a:

a) joint stock company, in which case no registration fees are required when the transfer is executed through the notarised endorsement (see point a above); contrarily, a fixed registration fee will apply if so-called “transfer” was used (see point b above). Lastly, transfers of shares require that the buyer pay so-called “Tobin Tax” at a rate of 0,20% of the transaction value (reduced to 0,10% in case the transaction is performed on regulated markets);

b) limited liability company, in which case the deed of transfer’s filing with the companies’ register requires a fixed registration fee.

Ireland Small Flag Ireland

Transfers on sale of shares in an Irish incorporated company are typically effected by a share transfer form and are subject to stamp duty at a rate of 1%. Stamp duty is payable by the purchaser. This should not be relevant in a scheme of arrangement.

Brazil Small Flag Brazil

One has to register the transfer of the shares in the share register transfer book of the company to effect the transfer of the shares in the case of a corporation or, if that is the case, require that the transfer is recorded by the custodian of the shares. Income tax on capital gains and certain social contributions will be due if there are capital gains, but no specific stamp taxes or duties are due in the country.

Cyprus Small Flag Cyprus

Section 73 of the Companies Law contains the only restriction governing the transfer of shares in a Cyprus company and provides that, irrespective of what is contained in the company’s articles of association, the company may not proceed to register a transfer of shares unless a properly executed instrument of transfer is delivered to the company.

In general, however, the following formalities are required in order to document a transfer of shares in Cyprus:

i. Sale and purchase agreement in relation to the shares being acquired;

ii. An instrument of transfer properly executed and delivered to the company;

iii. A resolution of the board of directors of the company approving the transfer of shares;

iv. Cancelation of the expired and issuance of new share certificates;

v. Amendments in the register of members of the company; and

vi. Filling all the relevant application forms with the Registrar of Companies and Official Receiver in Cyprus.

Nominal local fees would be applicable for the registration of the transfer of shares with the ROC as well as stamp duty considerations which should be taken into consideration.

Norway Small Flag Norway

A share sale agreement could in principle be executed without observing any particular form under Norwegian law. A buyer is not liable to pay stamp duty or any type of transfer taxes on the acquisition of shares in a Norwegian target company, neither public (ASA) nor private (AS).

In an AS-company, the LLCA provides that the buyer must notify the target about a share transfer. Unless otherwise provided in the target's articles of association, acquisition of shares is subject to the target company's consent, by resolution of the board of directors. Such decision shall be made as soon as possible after the acquisition is notified to the target and the buyer shall be notified without delay. Consent may only be denied on reasonable grounds and, if not granted, the buyer shall be provided with the reasons for denial and information on any action necessary to remedy the situation. If the buyer is not notified that consent is not given within two months following notification to the target, consent is deemed granted. When notification from target is received and consent from target is granted, the target must register the buyer in the target's shareholder's register without undue delay. The registration of ownership to the shares in the register formally transfer the title to the shares acquired, and legally protects the buyer from any action from the seller's creditors or competing third party buyers.

Transfer of shares in an ASA-company is, as a general rule, neither subject to notification from the buyer nor subject to approval from the target company, however the articles of association of the target company may describe otherwise.

Even though transfer of shares in ASA-companies are generally not subject to approval, the buyer may only exercise its shareholders rights when the transfer is registered in a shareholder register kept with a securities register (required under the PLLCA), or the transfer is notified and verified without being prevented by restrictions such as consent or pre-emption rights. Also, the articles of association of such ASA-companies may provide that the right to attend and vote at the general meeting can only be exercised if the transfer has been entered in the register of shareholders five working days before the meeting. Exercise of dividend rights, other disbursements and the right to participate and subscribe for new shares in capital increases is further always conditioned upon registration in the shareholders register kept with the securities register. The previous owner of the shares is obligated to ensure that the transfer is reported to the securities registry immediately following the share transfer. Note that for ASA-companies, it is assumed that a seller (unless otherwise agreed with the buyer) loses its rights to vote on the general meeting from the date he enters into a binding agreement to sell the shares, and that the buyer cannot exercise this right until he is entered into the register of shareholders.

Myanmar Small Flag Myanmar

Under section 83 of the MCL, a transfer of shares in a company is effective upon the company entering it in its register of shareholders. A company is required to enter such transfers subject to its constitution and the receipt of a duly stamped and executed instrument of transfer in the prescribed form, together with share certificates evidencing the interests proposed to be transferred and a declaration by the transferor or transferee (or both) regarding whether the proposed transfer would result in the target company changing its classification from a Myanmar company to a foreign company or vice versa.

Under the Myanmar Stamp Act 1899 stamp duty is payable on share transfers in the amount of 0.1 per cent of the value of the transfer price (under Notification No 146/2016).

Within 21 days of a transfer of shares in a Myanmar-registered company, a notice must be filed with Dica in the prescribed form notifying it of the transfer. Other associated filings with Dica may also be required, for example, for a change in business name.

Under the MIL a notice must be filed with MIC for any transfers of shares in, or the business of, a company with an MIC permit or endorsement. As noted in question 1, the prior approval of the MIC will be required for any direct or indirect transfers of shares in a company which has an MIC permit or endorsement (or to transfer the business itself), if it will result in an entity that is not an affiliate of the transferor acquiring majority ownership or control of the shares, or more than 50 per cent of the assets, of the business.

Greece Small Flag Greece

Listed shares are transferred via the Stock Exchange Depositary. Non-listed bearer shares are transferred with minimum formalities, notably by the conclusion of an agreement and the delivery of the physical share title. If the titles are electronic and not physical, specific registrations must be made in the electronic register of the company and must be signed by the contracting parties and the company. With respect to registered shares, the parties must register the transfer in the shareholders’ ledger and sign it, as otherwise the transfer will only be valid and binding between the parties but not vis a vis the company. Physical registered shares are physically transferred and endorsed in writing at the back of the title.

Germany Small Flag Germany

For a valid transfer of GmbH shares, German law calls for a notarization of the transaction. For the purchase of shares of a stock corporation no specific formalities are required. However, a statutory merger agreement must be notarized.

Belgium Small Flag Belgium

A transfer of shares usually implies the following formalities:

  • the entering into a share purchase agreement;
  • authorization and approval of the share transfer by the seller and the purchaser;
  • registration of the share transfer in the share register.

A share transfer may also imply the issuance of a share certificate in the name of the purchaser.

In principle, a transfer of shares does not give rise to Belgian stamp or registration duties.

Vietnam Small Flag Vietnam

22.1 In the case of any target LLC, ownership of contributed charter capital is in all cases registered on the face of either or both of an Investment Registration Certificate (in the case of many foreign-invested LLCs) and/or an Enterprise Registration Certificate (in the case of all LLCs) – each of which is a certificate issued by the relevantly-empowered State licensing authority (noting that such certificates cannot necessarily be relied upon as providing conclusive evidence that the charter capital registered therein has in fact been duly and properly paid in). Therefore, in order for any ownership of any contributed charter capital of any LLC1 to be transferred, it is invariably necessary to procure amendments to the applicable IRC and/or ERC, in order to register such transfer and the particulars of the transferee.

22.2 In the case of any target LLC, any transfer of any contributed charter capital will require the following documentation, in addition to the necessary amendments to the applicable IRC and/or ERC:

  1. a charter capital transfer agreement;
  2. amendments to the internal Register of Members maintained by the LLC; and
  3. the cancellation of the Certificate of Charter Capital Contribution held by the transferor and the issuance of a new Certificate of Charter Capital Contribution in favour of the transferee.

22.3 In addition, in order for any transfer of contributed charter capital in any LLC to be completed, “tax clearances” must be obtained from the local tax authorities, following the payment of “capital transfer tax” (where applicable). In relation to target companies being LLCs, capital transfer tax is payable by all vendors (whether foreign or domestic, organisations or individuals) who realise any capital gain on the transfer, at the rate of 20% of the capital gain realised by the vendor on the transfer.

22.4 In the case of any target JSC being a private company, in order for any transfer of shares in that JSC to be documented and completed, in all cases the following documentation is required:

  1. a share transfer agreement;
  2. the updating of the internal Register of Shareholders of the JSC, to reflect the transfer and the particulars of the transferee;
  3. the cancellation of the Share Certificate held by the transferor and the issuance of a new Share Certificate to the transferee.

22.5 In the case of any target JSC being a private company, tax clearances must also be obtained, following the payment by the vendor of capital transfer tax (being assessed in all cases at 20% of the capital gain realised by the vendor on the transfer).

22.6 Where any transfer of shares in any private JSC gives rise to any change in the shareholdings of the founding shareholders of the JSC or any change in the foreign shareholdings in the JSC, such changes must be reported to the relevant local corporate licensing authority as a post-completion matter.

22.7 Where the purchaser of any shares in any private JSC is a foreign investor, in most cases it will be necessary for that foreign investor and the target company to apply for and obtain from the local corporate licensing authority an “acquisition approval”, as a condition precedent to completion.

22.8 In the case of any target JSC being a public and listed company:

  1. where shares are purchased by way of normal On-Market Transactions, no documentation is required;
  2. where shares are purchased by way of Direct Agreement Transactions, a share sale and purchase agreement is required;
  3. the transaction is implemented by the parties’ respective Vietnam securities brokers, via the compulsory electronic share registry and clearance systems maintained by the VSD and Custodian Banks being members of the VSD; and
  4. the results of the transfer and the registration of the transferee’s ownership of the shares are recorded in the electronic share registry system maintained by the VSD.

22.9 In the case of any target JSC being an unlisted public company, the procedural and documentation requirements are broadly similar to those applicable in relation to listed companies, except that the transfer process is administered via the UPCOM (with the parties’ respective securities brokers, the VSD, and the Custodian Banks still playing a crucial and compulsory roles, in a manner being broadly similar to that applicable in the context of listed companies).

22.10 In the case of any target JSC being a public company (whether listed or unlisted), full completion of the transfer of shares cannot occur until such time as capital transfer tax has been paid by the vendor, assessed in all cases at the rate of 0.1% of the transfer consideration (with the realisation or otherwise of any capital gains being irrelevant). In practice, it is the responsibility of the vendor’s securities broker to deduct and remit such capital transfer tax to the State, before remitting the balance of the sale proceeds to the vendor.

22.11 In relation to any M&A transaction in Vietnam where the vendor and/or the purchaser is a foreign investor, Vietnam foreign exchange control laws must be considered, and it will in all cases be compulsory for purchase prices to be routed through certain special types of statutory bank accounts held by the vendor, the purchaser, and/or the target company with appropriately licensed banks in Vietnam.

22.12 There are many variables and permutations which apply in connection with M&A transactions in Vietnam. The procedural and documentation requirements of any two or more M&A transactions in Vietnam are rarely identical. From a procedure and documentation perspective, each and every proposed M&A transaction in Vietnam must be considered and analysed carefully on its own individual and unique merits.

Switzerland Small Flag Switzerland

The transfer of shares in a private company requires a share purchase agreement and the delivery of the (endorsed) share certificates or, if no certificates have been issued, a written assignment declaration. If the shares are subject to transfer restrictions, transfer of legal title requires the prior approval by the board of directors. Shares in listed companies are typically in book-entry form; their transfer is executed electronically through the banking system.

Federal stamp tax is payable in connection with a transfer of Swiss shares if a securities dealer (as defined in the Federal Stamp Duty Act) is involved, either as a party or as an intermediary. Certain types of transactions or parties are exempt. Securities dealers under the Federal Stamp Duty Act include banks, dealers in securities and, among others, Swiss companies holding securities with a tax book value of more than CHF 10 million. A public tender offer regularly triggers stamp tax as it involves a bank for the settlement of the offer. The duty is typically paid by the bidder.

Russia Small Flag Russia

Under Russian law, formalities associated with registration of transfer of title would differ depending on the legal organisational form of a target company.

The right to register transfer of title to shares in joint-stock companies is vested with professional independent registrars or, as the case may be, depositaries (nominal holders).

Although overall approach to registration may slightly vary from one registrar/depositary to another, the general rule is that in order to register transfer of shares, the buyer shall provide to the registrar/ depositary a set of required documents, which usually include the seller’s transfer instruction as well as a set of documents with respect to the buyer required to open the relevant personal account with the registrar / depositary (usually includes the new shareholder’s questionnaire, charter, resolution on establishment, etc.).

With regard to limited liability companies, transfer of participation interest requires mandatory certification by a notary public of the relevant participatory interest sale and purchase agreement. Once notarial certification is in place, the relevant title change is to be entered into the Unified State Register of Legal Entities. In order to effect such entry, an application drafted pursuant to an approved form is submitted within 2 (two) business days of certification of the agreement to the registration authorities, which then have 5 (five) business days to register the transfer of title to participatory interest.

Romania Small Flag Romania

In case of private companies, the main documents that need to be prepared in order to document a share transfer are: the sale-purchase agreement, the shareholders register, corporate approvals and registration forms with the Commercial Registry Office (in case of limited liability companies).

In the case of listed companies, the parties must complete the stock market-specific formalities for share transfers.

Qatar Small Flag Qatar

There are no taxes and duties on a share transfer. If the transfer is of a listed company, the same must be registered on the exchange and the company’s own register. If a company is not listed then the transfer must be approved by the Ministry of Finance, Ministry of Economy and Commerce, Department of Labour and a transfer document needs to be authenticated at the Ministry of Justice.

Under the QFMA Mergers & Acquisitions Rules, following the merger a certificate has to be given to the acquirer proving that the assets owed to him have been transferred.

United States Small Flag United States

The majority of shares in U.S. public companies are held in book-entry form by the Depository Trust Company, commonly referred to as DTC. Where this is the case, transfers are undertaken by banks, brokerages and other financial institutions and typically do not result in any change to record ownership. Where shares are held in registered form, a transfer agent typically completes transfers of shares for the issuing company. The specific requirements of each transfer agent may differ slightly, but in general shareholders must provide a stock power, provide evidence of legal capacity to sign the stock power and send any physical share certificate representing the shares to be transferred to the transfer agent. Once it receives all the necessary documentation, the transfer agent will transfer ownership on the company’s share register and, if the new holder wishes to hold its share in certificated form, issue a new certificate.

The federal government does not impose transfer taxes on the transfer of shares, but the laws of some states do impose such transfer taxes.

Sweden Small Flag Sweden

A share transfer is normally carried out through a share sale and purchase agreement (long form or short form). The recording of the new owner in the target company’s share register and the physical transfer of the original share certificates (if such have been issued) to the purchaser are legal requirements for third party protection for a share transfer (and to ensure that the buyer gets to enjoy the rights as shareholder). There is no external registration process (notary public or similar for the transfer of shares or assets (other than real estate)) and there is no transfer tax levied on share transfers.

Philippines Small Flag Philippines

A simple deed of sale is typically executed to document the transfer, which can be submitted to government authorities where necessary. AT closing, the stock certificates in the name of the seller would have to be cancelled and new ones issued to the buyer. They buyer would also have to be registered as the owner of the acquired shares in the company’s stock and transfer book or in the records of the company’s stock transfer agent.

Sales of shares trigger documentary stamp taxes and capital gains taxes, unless the shares are listed and are sold in the PSE, in which case, the relevant transfer tax is the stock transaction tax.

Guernsey Small Flag Guernsey

In order to register the transfer of shares in a Guernsey company there are two basic requirements. These are the execution of a transfer instrument and the updating of the company’s Register of Members. If shares are held in certificated form, an instrument of transfer compliant with the requirements of the company’s articles of incorporation will need to be completed, signed and delivered to the company secretary. If the shares are held in uncertificated form and are traded on a computerised settlement system, for example on CREST, a transfer of shares will need to be carried out in accordance with the relevant CREST rules and the Uncertificated Securities (Guernsey) Regulations, 2009.

Once the instrument of transfer has been delivered to the board they may either direct that the Register of Members be amended or, on rare occasions and unless prohibited by the articles of incorporation, refuse to register the transfer. The new shareholder will only be recognised as the owner of the shares and adopt the rights and liabilities of those shares once entered into the Register of Members.

With the exception of when the target company owns real property, no stamp duty, registration tax or similar documentary tax or charge is currently payable in Guernsey for the sale of shares in a Guernsey company. Consideration should be given to whether such fees and taxes or their equivalents may be payable in other jurisdictions if the transaction documents are being executed outside of Guernsey.

Japan Small Flag Japan

For a private company, in addition to a share transfer agreement between the parties, if the target company is a company that issues share certificates (the Companies Act allows private companies to choose whether they will issue share certificates or not), the seller must deliver the relevant share certificates to the acquirer. Further, regardless of whether or not the target company issues share certificates, the shareholder registry must be updated in order for the acquirer to perfect the share transfer. The Articles of Incorporation of private companies usually contain a provision that requires the approval of the board of directors or the shareholders for a share transfer. In such case, a resolution must be approved at a board of directors’ meeting or shareholders’ meeting, as applicable, and the minutes to record such resolution must be prepared.

For a public company, the transfer of shares of a listed company will become effective when the share transfer is recorded in the account of the acquirer at the relevant account management institutions (typically, the relevant securities companies).

No transfer taxes or duties are imposed on the transfer of shares of public or private companies in Japan.

Isle of Man Small Flag Isle of Man

Subject to any restrictions contained within a company’s constitutional documents, shares in 1931 Act and 2006 Act companies are transferable by a written instrument of transfer. There is no stamp duty on shares payable in the Isle of Man.

Mauritius Small Flag Mauritius

Generally, a transfer of shares needs to be approved by the board of directors of the target company. Pursuant to section 87 of the Companies Act 2001, a company shall not enter a transfer of shares in the share register unless a valid instrument of transfer has been delivered to the company in the form required by law. The share transfer form should be executed and filings must be done with the ROC and a copy of same can be sent to the FSC. The register of members should be updated as regards to the transfer and if relevant, the share certificates should be issued.

Stamp duty is applicable where the company whose shares are being transferred owns immovable property in Mauritius.

Bermuda Small Flag Bermuda

Where an acquisition is being effected by way of amalgamation, merger or scheme of arrangement there is no formal instrument to transfer shares. In the context of a merger or amalgamation, the merger or amalgamation is effected by operation of law subject to the terms of a statutory merger agreement upon the submission to the RoC of an application to register the same together with certain supporting documentation.

In the context of a scheme of arrangement, the transfer of shares is effected by the order of the Bermuda courts sanctioning the scheme (or any subsequent order).

Where a company is a private company, an instrument of transfer is required under Bermuda law. However, where a company is a public company listed on an exchange, the bye-laws of the company will typically provide that transfers can be made in accordance with the rules of such exchange. This will usually negate the need for an instrument of transfer and may permit transfers by electronic means.

Provided that the subject of the acquisition is an exempted company, that is to say, not a company subject to local ownership requirements, no transfer taxes or duties should arise on the transfer of shares.

British Virgin Islands Small Flag British Virgin Islands

There are no transfer taxes or duties in the BVI, unless the merger relates to a company which holds real estate in the BVI. The merger plan and corporate authorisations will deal with all necessary transfer formalities. The transfer of shares outside of a merger is dealt with by a share transfer form and requires the company’s registered agent to update the register of members following the transfer.

Jersey Small Flag Jersey

Other than in the case of a transmission of shares by operation of law, the transfer of shares that are certificated generally requires that an instrument of transfer in writing has been delivered to the target company. The articles of association of the company usually specify additional requirements including delivery of the relevant share certificate (or the giving of an appropriate indemnity for a lost share certificate) and that the instrument of transfer be in a form approved by the directors and executed by the transferor and, where shares are not fully paid, by the transferee.

Uncertificated shares may be traded through CREST pursuant to the Companies (Uncertificated Securities) (Jersey) Order 1999 (as amended).

There are no registration, stamp, documentary or any similar taxes or duties of any kind payable in Jersey in connection with transfers of shares (except in the case of share transfers that confer a right of occupation of dwelling accommodation in Jersey).

Turkey Small Flag Turkey

Under Turkish law, a share transfer would be effectuated once the share certificates are endorsed and delivered to the acquirer who, as the new shareholder, is recorded with the share ledger of the company. For publicly held companies, shares are kept in electronic form, and therefore share transfers are tracked through the Central Registry Agency (known as the MKK).

As of August 2016, share transfer agreements are no longer subject to a stamp tax which was previously 0.948% of the deal value and was usually borne equally by both parties.

Nigeria Small Flag Nigeria

Subject to any restrictions specified in the constitutional documents of the target, shares of a Nigerian company are transferable by the execution of written instrument of transfer. With regards to publicly traded companies, the transfer must be effected in accordance with the rules and regulations of the exchange where the shares are listed. Furthermore, shares traded on The NSE are subject to taxes and other charges, including brokerage commission, typically borne by the buyer and the seller respectively. The acquirer will also pay some fees to the SEC, typically calculated on an ad valorem basis based on the deal size.

The Capital Gains Tax Act exempts any gains realized by a person from a disposal of shares from capital gains tax. In addition, the Stamp Duties Act exempts instruments for the transfer of shares (share transfer forms) from the payment of stamp duty. However, parties to share acquisition transactions will usually stamp the share transfer forms at a nominal rate of 500 Naira (about US$3.30) for the original document and 50 Naira (about US$0.30) for each counterpart.

Hungary Small Flag Hungary

The formalities prescribed by the relevant laws, most importantly the Civil Code, the Company Procedure Act as well as the Capital Market Act depend on the corporate form of the target company. Different formalities apply in case of limited liability companies (Kft.), private companies limited by shares (Zrt.) and public companies limited by shares (Nyrt.).

Quota of a limited liability company. The ownership stake held by a shareholder in a limited liability company (Kft.) is called a “quota”. Most commonly, shareholders have one single quota in a Kft. (proportionate to the rights it embodies), but if the shareholders so agree in the articles of association, a shareholder may hold more than one quota. In order to validly transfer a quota, the parties shall conclude a written quota transfer agreement. In order for the transfer to become effective vis-á-vis the company, the acquirer of the quota shall notify the company on the acquisition and enclose the quota transfer agreement to the notification. Once the managing director of the target company has received the acquirer’s notification, he or she shall register the acquirer in the company’s members’ list. The acquirer as the new owner of the quota shall be subsequently registered in the company register kept by the court of registration.

The transfer of a quota may be subject to restrictions. Compliance with these restrictions and proper documentation thereof may be a precondition to the transfer being registered. Restrictions may include the following

(i) If the quota is sold to a third party acquirer (who is not a shareholder of the company yet), the other shareholders, then the company, and finally another third party designated by the company have a pre-emption right regarding the respective quota. Hence, in order to register the acquirer as the new owner of the quota, a waiver or non-exercise of such pre-emption rights must be documented;

(ii) If the shareholders so agree in the company’s articles of association, the quota can be transferred to a third person only with the consent of the company (such consent to be granted by the supreme body of the company);

(iii) If a quota is to be divided and transferred to two or more separate acquirers, or if only a part of the quota is transferred and the other part is kept by the original shareholder, the quota must be divided. Such division must be approved by the supreme body of the company, and shall be documented to register the transfer.

Shares of companies limited by shares. Both printed and dematerialized shares are validly transferred if a valid legal title underlies the transfer, such as sale and purchase, donation, swap, contribution to another company’s registered capital, etc. Printed shares in a private company limited by shares (Zrt) can be transferred by handing over the printed shares to the acquirer and simultaneously ensuring via a written endorsement that the acquirer’s name be indicated on the share as its owner. For the acquirer to become the owner of the share, its name must be indicated as the owner of the share at the end of a successive chain of previous owners (endorsements). Dematerialized shares in private or public companies limited by shares can be transferred via transferring and crediting the respective shares to the acquirer’s security account.

Importantly, if the formalities duly certify that a given person has become the owner of the respective share, the defect or absence of a valid title underlying the transfer will not have effect vis-á-vis third persons acting in good faith, i.e. the owner certified by the formalities shall be deemed as the owner of the share. In order to be able to be able to exercise its shareholder’s rights vis-á-vis the company, the transfer shall be reported to the company and be registered in the book of shares by the company’s management.

In addition to the above, new shareholders holding more than 50 % of the votes in the target company shall be registered in the company register.

Public companies limited by shares. If a public company limited by shares is acquired by way of a public takeover bid, additional documentation requirements apply as set out in point 21 above.

Updated: November 13, 2018