What formalities are required in order to document a transfer of shares, including any local transfer taxes or duties?
Mergers & Acquisitions (2nd edition)
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.
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.
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.
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.
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.
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:
- a charter capital transfer agreement;
- amendments to the internal Register of Members maintained by the LLC; and
- 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:
- a share transfer agreement;
- the updating of the internal Register of Shareholders of the JSC, to reflect the transfer and the particulars of the transferee;
- 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:
- where shares are purchased by way of normal On-Market Transactions, no documentation is required;
- where shares are purchased by way of Direct Agreement Transactions, a share sale and purchase agreement is required;
- 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
- 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.
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.
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.
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.
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.