What formalities are required in order to document a transfer of shares, including any local transfer taxes or duties?
Mergers & Acquisitions
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. In case of Brazilian LLC's, the shareholders must agree on an amendment to the articles of association of the company to reflect the change of the company's shareholding.
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.
There is no transfer tax or duty in the Cayman Islands. 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).
ZL: Generally speaking, the target company should first go through the formalities for altering the registration in the administration of industry and commerce. And companies in certain industries, e.g. securities companies, should also seek approval from competent authorities before the registration in the administration of industry and commerce. Furthermore, the seller should submit an annual enterprise income tax return, which includes the declaration of share transfer income.
In case a foreign investor intends to acquire a listed company, according to Measures for the Administration of Strategic Investment in Listed Companies by Foreign Investors, it should submit application to the Ministry of Commerce for approval. Then, it should go through the formalities for confirmation of share transfer at the securities exchange and report to the CSRC for archival filing. Ultimately, the listed company should go through alteration registration at the administration of industry and commerce upon the issuance of certificate of approval for foreign-invested enterprises by Ministry of Commerce.
In case a state-owned shareholder transfers its shares of the listed company by agreement, according to Interim Measures for the Administration of State-owned Shareholders’ Transfer of Listed Company shares, it should submit the transfer to the state-owned assets supervision and administration institution at or above the provincial level for approval.
There is no specific form or process (e.g. notaries or similar) required for the valid transfer of ownership in shares. The transfer is usually effected by the language of the share purchase agreement or a separate short form share transfer note confirming the transfer of ownership. In Finland, transfer tax will become payable in connection with the sale and transfer of non-listed shares and other securities in case at least one of the contracting parties is tax resident in Finland.
The acquisition and the transfer of shares in a German limited liability company require a notarisation by a German notary public. The (cost-saving) notarisation by a Swiss notary public bears legal risks. Whereas a share purchase agreement regarding shares in a German limited liability company has to be notarised, the transfer of shares in a German stock corporation does on the other hand not require a notarisation. If the target owns real estate properties, real estate transfer taxes (RETT) may become due in the contexts of the transfer of the shares. There are however in principal no stamp duties under German law on the transfer of shares.
Ιt must be noted that Greek companies limited by shares may issue registered and/or bearer shares; different procedures apply on the different types of shares, accordingly.
Registered shares are transferred pursuant to a share purchase agreement which is followed by delivery of the possession of the share title (if issued) to the new holder and registration of the transfer in the shareholders’ ledger. If the transfer is not registered in the shareholder’s ledger, the transfer of shares will only be considered valid and binding between the transferor and the transferee but not vis a vis the company.
On the other hand, bearer shares are transferred with the minimum of formalities, notably by the conclusion of an agreement between the transferor and the transferee for the transfer of ownership and the delivery of the share title. The mere possession of the titles serves as evidence that the bearer is in fact the true shareholder of the company, appearing thus before the company and any third party without any additional requirement.
Following recent changes in tax legislation, the transferee or the transferor are not required at the time of the transfer to file a transfer tax statement, documenting the transfer of the titles, nor are they required to pay any taxes at this stage. The relevant income will be only taxed through the filing of the annual tax return. The capital gains included in such tax return is determined pursuant to the respective law provisions which establish formulas determining the capital gained by the seller. However, a complete file of all relevant transaction documentation should be kept by the seller and the buyer, in order to be available in a possible future tax audit. Such file should inter alia include the relevant transfer agreement, corporate registry and tax authority certificates in cases where the buyer and/or the seller is seated abroad and a double taxation treaty is applied, and financial statements of the target company.
Lastly, in certain circumstances, share transfer agreements must be notarized. This will include the engagement of a notary, whose fees are calculated on the basis of transaction value.
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.
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.
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.
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 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.
There is no equivalent of a stock transfer form in the Kingdom.
For the completion of share transfers in an LLC, the LLC articles should be amended, and the register of members updated, to reflect the changes in shareholdings. To amend the LLC articles an application is made to the MOCI to approve amendments which, once approved, must then be signed by all LLC shareholders before a local notary public. Changes to the register of members must also be notified to the MOCI.
Where the entity is a JSC, updates are to be made to the share register following a transfer but there is no requirement to amend the JSC's articles of association or bylaws to effect a share transfer.
There are generally no stamp duty taxes or duties payable upon the transfer of shares both in an LLC and a JSC. However, a 20% capital gains tax is imposed on the disposal of shares of a Saudi entity by a non-resident.
The transfer of shares in a private company is typically documented under a share purchase agreement. A tender-offer is required in the case of a transfer of a substantial amount of shares in a listed company, which requires a Tender Offer Statement and other documents to be prepared. It is also common in a tender offer for the tender-offeror and major shareholders to enter into an agreement regarding acceptance of the tender-offer.
In addition to an agreement between the parties on the transfer of shares, in the case of the transfer of shares in a company that issues share certificates, the share certificates themselves must be delivered in order for the transfer to be effective. In the case of a listed company, its shares are managed under the book-entry system of the Japan Securities Depository Center, Inc. (JASDEC), so in order to be effective the transfer needs to be recorded in the account of the transferee pursuant to the Act on Book-entry of Company Bonds, Shares, etc.
Furthermore, in order for a buyer to assert shareholder rights against the company after the transfer of shares, the transfer must be listed or recorded in the shareholder registry.
Share transfer does not trigger stamp duty.
A share transfer instrument is required to be entered into between the transferor and the transferee and witnessed by at least one witness.
The share transfer instrument is subject to stamp duty calculated at the rate of 0.1% of the greater of the sale price of, or the amount paid up on, the shares, if it is executed in Thailand or executed overseas and subsequently brought into Thailand.
Unless agreed otherwise by the parties, the stamp duty is payable by the seller of the shares.
Publicly Listed Company
There is currently no stamp duty payable in the case of a transfer of listed shares.
The transfer of shares in limited liability companies need 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. Any 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 and comparably low amounts.
Regarding asset deals, it is important to note that the effective transfer of assets leads to the realisation of hidden reserves and therefore to a tax obligation under Austrian law. Under the Reorganisation Tax Act special rules apply which may allow tax obligations associated with hidden reserves to be passed over to the legal successor under specific circumstances.
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 the 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.
Transfers of shares in private and public non-listed companies need to be effected in writing. In addition to the formalities that may be required in terms of the memorandum and articles of association of the company, a share transfer has to be registered with the company and the transferee’s name entered in the company’s register of members.
Notification of the transfer to the Registrar of Companies has to be effected by means of a return known as a Form T. In order to be successfully registered, the return has to evidence the payment any tax and duty due on the transfer.
Unless otherwise exempt, transfers of shares in Maltese companies attract stamp duty and income tax on capital gains realised. Payment of stamp duty is effected by the submission to the Commissioner of Revenue of the documents due in accordance with the Duty on Documents and Transfers Rules (Subsidiary legislation 364.06, Laws of Malta) together with the full payment of the amount due by way of duty.
A provisional payment of income tax equivalent to seven percent of the consideration on the share transfer is payable upon the execution of the deed of transfer. Such payment, made to the Commissioner of Revenue, is to be accompanied by the submission of the required documentation, including copies of the financial statements of the target and of the share transfer agreement, the Form T, the duly completed schedules found in Capital Gains Rules (Subsidiary Legislation 123.27, Laws of Malta) and an architect’s valuation in the event that the company is a property-owning company.
Transfers of securities listed on the Malta Stock Exchange are exempt from the formalities listed above. In general, capital gains derived from the disposal of such securities would be exempt from tax in the hands of the shareholder and transfer of such securities should be exempt from the payment of stamp duty.
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.
In the case of private JSCs, transfers of shares require the following documentation:
- a share sale and purchase agreement; and
- the updating of the target company’s register of shareholders.
In the case of public JSCs:
- the Vietnam Securities Depository (VSD) maintains an electronic share registry and clearance system, through which the transfer of shares is implemented; and
- transfers of shares require the updating of the target company’s electronic register of shareholders, as maintained by the VSD (as opposed to hard copy documentation) – although a share sale and purchase agreement is necessary in respect of “off-market” transactions.
In the case of LLCs, transfers of contributed charter capital require:
- a charter capital sale and purchase agreement; and
- the amendment of the enterprise registration certificate of the target company to register the particulars of the purchaser.
No stamp duty exists in Vietnam in relation to M&A transactions. There is, however, “capital transfer tax” payable on transfers of shares or equity interests, payable either at the rate of 0.1% of the total transfer consideration or 20% of the capital gain realised by the vendor on the transfer, depending upon the circumstances (with certain exceptions in limited situations). Before any proceeds of any M&A divestment transaction may be repatriated outside of Vietnam by any foreign-domiciled vendor, “tax clearances” must be procured from the Vietnam tax authorities.
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.
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).
These vary depending on the type of the target company.
A transfer of shares to a third party in a limited-liability company requires undergoing a two-stage procedure with the competent Trade Registry and publicity formalities.
The first stage requires submitting a file with the competent Trade Registry, and among others, a corporate resolution of the seller company approving the transfer of shares to the buyer. Such resolution is forwarded to the Romanian Official Gazette for publication.
Following publication, a 30-day opposition period starts during which creditors of the target company may oppose to the transfer.
If no opposition is raised by the target’s creditors during this period, the second stage of the transaction may be initiated, and a second file will require to be submitted with the competent Trade Registry, comprising of, among others, the constitutive deed of the company with the new shareholding structure and main clauses of the share-purchase agreement.
There are no transfer taxes or duties, however the Trade Registry charges a rather medical fee for the changes operated in the register and for the publication of the GMS Resolution in the Romanian Official Gazette.
For private joint-stock companies, the transfer of nominative shares (issued either in materialized or dematerialized form) is based on a statement made in the shareholders' registry signed by the buyer and the seller or by their proxies. The transfer of bearer shares is made by their simple delivery (traditio).
The revenues obtained in Romania following a transfer of shares are generally subject to a 16% tax rate due by the Romanian/non-resident legal entities or individuals obtaining such revenues, with certain tax exemptions being provided by law. Moreover, the provision of the Double Tax Treaties concluded by Romania should be taken into consideration when analysing the relevant tax treatment).
The transfer of shares in New Zealand is relatively straightforward and simply requires a share transfer form, which is recorded in the company’s share register. There is no stamp duty or similar tax on share transfers.
The following formalities are required in order to document a share transfer:
- entry into an agreement for the sale of the shares between the seller and the buyer;
- authorisation and approval of the share transfer by the seller; and
- in the case of certificated shares, delivery of an instrument of transfer, typically in the English context, a "stock transfer form"; or
- in the case of certificated shares held through CREST (the UK system for holding and transfer of shares in electronic form), through a transfer instruction being submitted through the CREST system.
In addition to the above, there are a number of administrative steps that need to be completed:
- the register of members of the company must be updated, (this is the point in time at which the buyer formally acquires legal title to the shares), as well as the target's register of people with significant control (if required);
- in the case of certificated shares, stamping of the stock transfer form by HMRC; and
- following the stamping of the stock transfer form, the share certificate in the name of the buyer is issued (and the share certificate in the name of the seller is cancelled); or
- in the case of shares held through CREST, the transfer of shares to the CREST account of the transferee, following which the register of members of the company is updated by the company's registrar to reflect the change in ownership which has occurred.
A buyer will generally be liable to pay stamp duty on a transfer of shares (levied at a rate of 0.5% of the value of the shares transferred) unless the consideration for the shares is £1,000 or less, or some other exemption applies (for example, if the shares are listed on certain specified markets, such as AIM). In addition, transfers of GDRs or ETFs do not generally attract any charge to stamp duty.
Savings in stamp duty which had previously been available in respect of takeovers conducted by way of some types of scheme of arrangement are no longer available, following a recent change in the law.
In Spain the formalities required to document an ordinary transfer of shares (for non-listed companies) will depend on the type of company to be acquired. In this sense, the most common type of companies in Spain are the Private Limited Company (Sociedad de Limitada), or a Private Company (Sociedad Anónima) and in accordance with Spanish Companies Act (Ley de Sociedades de Capital), the formalities to execute a transfer of shares will depend on whether the company to be transferred is a Private Limited Company (Sociedad de Limitada), or a Private Company (Sociedad Anónima), being generally the transfer of the shares in a Private Limited Company more restricted than the transfer of shares in a Private Company.
The main differences between the aforementioned company types to transfer shares, are the following:
- In Private Limited Companies, non- transferring shareholders have a pre-emption right on the acquisition of the shares in case the shares will be transferred to a third party (i.e. person different from the spouse, ascendants, descendants of the shareholder, or, if expressly included in the company’s By-Laws, in favour of a company member of the same group). While the general system regarding the Private Companies is that the shares are usually freely transferred, unless the transfer regime of the shares is expressly foreseen in the company’s By-Laws (and in both scenarios unless something different is stated in a shareholders agreement).
- Referring to Private Limited Companies (Sociedad Limitada), the voluntary transmission inter vivos of shares (e.g. by means of a shares purchase agreement) must be granted into a public deed, before a public notary. Notwithstanding, referring to Private Companies (Sociedad Anónima), the voluntary transmission inter vivos of shares does not require additional formalities further to those applicable for an ordinary private agreement. Likewise, regarding Private Companies (Sociedad Anónima) it must be pointed out that the share capital of Private Companies may be formed by either nominative or bearer shares. In this sense, the transfer system of each kind of share differs; nominative shares are transferred by means of endorsement and such transfer must be evidenced towards the company through the exhibition of the title in which the name of the new shareholder shall be included, while bearer shares are transferred by means of physical transfer, not being necessary to include the name of the new shareholder in the document evidencing ownership.
Nevertheless, the formalization of the transfer of shares, such transfers shall not be registered with the corresponding Commercial Registry. Regardless the aforementioned, in case the share transfer implies any of the following: (i) change of the company to a sole shareholder company (i.e. as consequence of the transfer, the shares of the company are owned by one sole shareholder) (ii) change of sole shareholder, such circumstances must be registered at the Companies Registry. Notwithstanding the above, the share transfer must be duly recorded in the shareholders registry book by the governing body.
Regardless the differences between the formal requirements for the transfer of shares in both different type of Spanish companies, the common practice in Spain is to formalize the transfer of shares before a public notary due to the public function and authority provided by such position. In this sense, is important to note that in Spain public notaries do not only provide evidence on the identity of the individual or entity that will sign the agreement, their authority and capacity to sign the agreement and the date of the agreement, but also they have the authority and corresponding obligation to control all the legality of the agreement (included all the terms and conditions agreed by the parties). Additionally, is also relevant to note that the resulting public deed will be a public document which will extremely difficult to challenge according to Spanish regulations either by the parties or by third parties.
With regards to the tax implications, the transfer of shares (both Private Limited Companies and Private Companies) does not trigger VAT expenses, stamp duties or whatever any other transfer taxes. Nevertheless, the Spanish tax regulations set forth an anti-abuse practices rule, that shall be analysed case by case, applicable to those companies which majority of assets are composed by Spanish real estate not affected/used to carry out the business activities.
In limited liability companies, the transfer of shares requires a share transfer agreement to be executed before a Notary Public and approved by the general assembly of shareholders. The resolution of the general assembly must then be registered with the competent Trade Registry and finally announced in the Trade Registry Gazette of Turkey. The transfer of shares must also be annotated in the share ledger of the company.
In joint-stock companies, (i) bearer shares certificates can be transferred by delivery of the share certificates to the acquirer, (ii) registered share certificates can be transferred by endorsement and delivery of the share certificates to the acquirer and (iii) shares which are not materialized in form of share certificates can be transferred by a written agreement transfer and assignment agreement. The transfer of registered shares must also be annotated in the share ledger of the Company.
In case of listed companies, the transfer of dematerialized shares is performed electronically through the Central Securities Depository.
Agreements relating to the transfer of shares of joint-stock companies or limited liability companies are not subject to any special tax. This being said, the transfer of shares by a legal person can be subject to a VAT of 18% in the following cases: (i) transfer of shares of a joint-stock company which are not materialized in the form of share certificates and which are held by the transferor for less than 2 years and (ii) transfer of shares of a limited liability company which are held by the transferor for less than 2 years.
It is worth mentioning that the formerly applicable stamp tax amounting to 0.948% of the transaction value (within a ceiling of TRY 1,865,946.80) applicable for each original copy of a contract is no longer applicable since 9 August 2016 as far as share transfers are concerned.