Stamp duty on shares

Generally, stamp duty is payable on shares purchase and transfers with value more than £1000. The stamp duty rate is 0.5% of the consideration for your shares. Rounded up to the nearest £5 on each share transfer form to be stamped by HMRC.

The consideration in the context of stamp duty is it can be in cash, other stock or shares or debt.

Universally, you must send in your stock transfer form together with the stamp duty payable to HM Revenue and Customs (HMRC) within 30 days.

How to calculate your stamp duty

Example 1 : Your shares consideration exceeds £1000

Mr. Luck bought 100 shares from Good Luck Company Limited for £2350. The stamp duty payable is £2350 x 0.5 per cent = £11.75 and rounded up to the nearest £5, thus, the stamp duty payable is £15.

Example 2: Your shares consideration is less than £1000

On the other hand, no stamp duty is payable if you buy or transfer shares value is less than £1000. Accordingly, you do not require to send the stock transfer form to HM Revenue and Customs for stamping.

Notify Companies House

Besides, you must also notify Companies House of the shares transfers that took place. By all means, you may register the share transfers by filing your confirmation statement with the Registrar of Companies.

Correspondingly, you must make sure the shares transfers information entered in your confirmation statement under the shareholders section has no errors.

Record shares transfers in Confirmation statement

Record shares transfers in Confirmation statement is inevitable. Generally, you are required to disclose your shares transactions during the year with Companies House.

For this purpose, it is important to complete your Confirmation statement correctly when you have shares transfers during the year. Otherwise, Companies House will reject your confirmation statement if the shareholders section of the form is incomplete or with errors.

Shares transfers illustration

For example, you have 100 shares issued to yourself when your limited company was incorporated. Subsequently, you transferred one share to your friend and 49 shares to your wife on 01 January 2019.

The table below show how to record shares transfers in Confirmation statement.

NameClass of shareNo. of shares heldNo. of shares transfer’dDate of reg.or transfer
MeOrdinary505001.01.2019
WifeOrdinary49
FriendOrdinary1
Total100

Correspondingly, you enter the date of transfer of 01 January 2019 next to your name only. Do not put the date of the transfer of 1 January 2019 in your wife or your friend name.

Accordingly, Companies House would recognize the transfer date of 01 January 2019 is the date of your wife and your friend received the shares.

Particularly, ensure the total number of your limited company’s shares in the column, number of shares currently held equal to total shares issued by your limited company. Otherwise, Companies House will return your Confirmation statement to your company’s registered office for amendment.

On the other hand, you may contact Companies House if you have questions about your shares transfers or filing your confirmation statement.

Confirmation statement is a snapshot of your company information registered with Companies House. Your company is required to submit this document at least once very 12 months. Failure to file your confirmation statement is a criminal offence.

Company buy back own shares

Company could buy back your own shares. Your company can finance your buy back or redemption of your own shares out of your capital. In this circumstance, your director must pass a special resolution. However, your company can only do this provided there is no restriction or prohibition in your company’s articles of association.

Solvency statement

In addition, your company directors must also make a statement about the solvency of your company immediately after the buy back and the subsequent year. All your company directors must sign the solvency statement.

Directors’ report and auditor’s report

Your company must make a copy of your solvency statement and your auditor’s report confirming your directors’ opinion and made available to your shareholders (members) at or before in the case of a written resolution. If your resolution is to be passed at a meeting, by making a copy of your directors’ statement and your auditor’s report available for inspection at that meeting.

Your company must also deliver a copy of your directors’ statement and your auditors report to Companies House. This must be done no later than the day on which your company first publish or give notice of your proposed payment out of capital.

For further information, you may refer to the section 719 of the Companies Act 2006.

Apply to court to cancel

In the event, a shareholder or a creditor of your company who did not consent or vote in favour of your resolution can apply to court to cancel your resolution. They can do it within five weeks of the passing of your resolution.

Consequently, the applicant to the court must complete the form SH16 and deliver it to Companies House immediately. When your company receives the notice of court application then you must notify Companies House using the form SH17. This must be done within 15 days of the making of a court order. Your company must also deliver a copy of the order to Companies House.

For further reading, you may refer to Parts 17 and 18 of the Companies Act 2006.

Your company must include the changes in your company’s shares capital in your Confirmation Statement.

Register of interests in PLC shares

Register of interests in PLC shares is governed under Part 22 of Companies Act 2006. The law gives power to a PLC to investigate who has an interest in its issued share capital.

Therefore, your company statutory registers must include keeping and maintaining the Register of interests in PLC shares according to the Companies Act 2006.

Generally, you are required to enter the details in your Register of Interests within three days upon you received the notice imposed under section 793 of the Companies Act 2006.

  1. The fact that the requirement was imposed.
  2. The date on which it was imposed.
  3. The information received in pursuance of the requirement.

The information must to enter include:

  • Against the name of the present holder of the shares in question.
  • If there is no present holder or the present holder is not known. against the name of the person holding the interest.

Correspondingly, your register must be made up so that the entries against the names entered in it appear in chronological order.

Place of inspection

On one hands, if your Register of interests in PLC shares is not kept at your company’s registered office address. You must inform Companies House of your Single Alternative Inspection Location (SAIL) address, the address where you keep the Register. Thus, this will be the place of inspection for this register.

Accordingly, you must inform Companies House if there is any changes to your registered office address and your SAIL address.

Fail to comply

Above all, you will receive imprisonment and fines for failing to comply under Section 814(3) of the Companies Act 2006.

Imprisonment Terms

Firstly, on conviction on indictment, you will get an imprisonment for a term not exceeding two years or a fine or both.

On the other hand, on summary conviction, you will get the following the prison term and fine.

CountryPrison termThe standard scale finesIf guilty
England and WalesA term not exceeding 12 monthsA fine not more than the statutory maximumEither or both
ScotlandA term not exceeding 6 monthsA fine not more than the statutory maximum
Either or both
Northern IrelandA term not exceeding 6 months A fine not more than the statutory maximum
Either or both

Commonly, your company will also be fined if you refused the inspection request made to your company with no good reasons. In addition, you must not remove any entries in your Register of interests deliberately. It is illegal. Thus, you are liable to fines if convicted.

Redenomination of share capital

Redenomination of share capital is allowed under Companies Act 2006. This applies to company limited by shares only. Your company is allowed to redenominate your share capital by passing a resolution. This includes any classes of your share capital into other currencies.

Before anything else, check your company Articles of Association for any clause relating to prohibition or restriction on redenomination of shares.

If no such clause then you are safe to proceed with your redenomination of share capital process with Companies House. To begin with, your company must use an appropriate spot rate of exchange. This must either be a rate prevailing on a particular day specified in the resolution or the average rate taken from each consecutive day of a period specified in the resolution. In any case, you must choose the day or period within 28 days ending on the day before the resolution is passed.

Consequently, you shall follow a three step route to calculate the new nominal value of each share in the class.

  • First, take the aggregate total of the old nominal value of all the shares of that class.
  • Then, translate that amount into the new currency at the rate of the exchange specified in the resolution.
  • Afterward, divide that amount by the number of shares in the class.

Accordingly, you must deliver the form SH14 to Companies House within one month of your redenomination took place.

Your application must include:

Disclosure of redenomination share capital in Companies House form SH14

You must disclose the following.

  • First, the class of shares whether it is ordinary share or preference share etc.
  • Second, number of shares redenominated.
  • Third, existing nominal value of each share
  • Lastly, new nominal value of each share.

Statement of capital

Statement of capital is a summary of a limited company’s share capital. The statement includes:

  • The total number of shares of the company
  • The aggregate nominal value of the shares

If the company has more than one class of shares, the details of each class of share must be provided in the following manner:

  • Prescribed particulars of the rights attached to the shares
  • Total number of share for each class of share
  • Aggregate nominal value of for each class of share
  • The amount paid up and unpaid on each class of share

You will complete your statement of capital when you first incorporating your company. Subsequent shares allotment must also be registered with Companies House.

Share capital forms

Use the share capital forms to notify Companies House of any changes to your company’s share capital. The form reference and purpose is listed below for your reference.

Form referencePurpose
SH01 Allotment of shares
SH02
Notice of consolidation, sub division of shares or re-conversionof stock into shares or redemption of redeemable shares
SH03Notify a purchase of own shares
SH04Notify a sale or transfer of treasury shares
SH05Notify a cancellation of treasury shares
SH06
Notify a cancellation of shares
SH07Notify a cancellation of shares: public company
SH08Notify a name or other designation of class of shares
SH09Allotting a new class of shares by an unlimited company
SH10Give notice of particulars of variation of rights attached to shares
SH11Give notice of a new class of members
SH12Give notice of particulars of variation of class rights
SH13Give notice of name or other designation of class of members
SH14 Redenomination of shares
SH15 Reduction of capital as a result of redenomination
SH16Give notice of application to court to cancel special resolution
SH17Give notice by the company of application to cancel special resolution
SH19Statement of capital when reducing capital in a company
SH19Statement of capital when re-registering from unlimited to limited
SH50Apply for trading certificate for a public company
980(1)Notice of takeover offer to non-assenting shareholders
980decGive notice of declaration to non-assenting shareholders
984Give notice of a takeover to non-assenting shareholders

Confirmation statement

Your Confirmation statement must include the changes in your share capital.

Shares allotment

You may increase your company’s share capital by allotting shares. The UK company law requires your company director to deliver the form SH01 to Companies House within one month of your shares allotment event took place. You must include your statement of capital with your SH01 form.

Paid and Unpaid shares

You must specify the amount of shares paid in cash and unpaid in your shares allotment form.

Non cash consideration for the shares allotted

If your shares allotted fully or partly for non-cash consideration, you must show the extent to which your company have treated the shares as paid up on your form SH01 and you must also include a brief description of the non-cash payment for the shares.

Series of allotment

You can notify a series of allotments on the same form SH01, but you must send your form SH01 to Companies House no later than one month after the date of the first allotment. If you do this, the statement of capital should reflect your company’s position following the last allotment.

Bonus Shares

Your company must notify the allotment of your bonus shares to Companies House by delivering the form SH01. It should show the amount paid on each share as nil or zero and the shares as paid up otherwise than in cash.

Allotment of shares by unlimited company

An unlimited company only needs to notify Companies House if it is allotting a new class of shares i.e. class of shares which have rights that differ in any way to any previously allotted shares. You must complete and deliver the form SH09.

When filing your Confirmation statement with Companies House, you are required to update your statement of capital using the CS01 additional information page form.

Redeem shares

Redeem shares is allowed if your company have issued redeemable shares with the agreement that your company will buy them back at the option of your company or your shareholder after a certain period of time.

You can only redeem paid up redeemable shares.

Your company directors may, if authorized either by your company’s articles or by a resolution, set the terms of your shares redemption.

The terms of redemption of shares must be stated in your company’s articles.

Your company must submit the Companies House form SH02 together with a statement of capital to the Registrar of Companies within a month of your redemption.

The form SH02 can also be used to give notice of consolidation, sub-division and re-conversion of stock into shares.

The changes in your shares capital as a result of your shares redemption must be included in your confirmation statement.

Purchase of own shares

Your company may purchase of its own shares if there is no restriction or prohibition in the articles of association. Your shareholders must approve it.

However, your company is not allowed to purchase of its own shares if this would leave only redeemable shares in issue.

You must notify Companies House when your company purchase of its own shares. Complete the form SH03 and send it to Companies House. The form SH03 is used for two purpose, shares purchased for cancellation and shares purchased into treasury.

For Private and Public company

When your company submit the form SH03 to notify Companies House a purchases its own shares event, your shares will be cancelled on their return. If your company is cancelling the shares immediately, the form SH06 which includes a statement of capital must also be delivered to Companies House.

For Public limited Company

However, if your company is a public limited company with qualifying share, your company may either cancel those shares immediately or hold them in treasury for resale or transfer to an employees’ shares scheme at a later date or cancel them at a later date.

Your company must notify the initial purchase of treasury shares with Companies House and if your company is cancelling those treasury shares immediately you must complete the form SH06 and send it to Companies House.

If your company sell or transfer the shares from treasury, your company must deliver the form SH04 and if your company subsequently cancels the shares, the form SH05 which includes a statement of capital must be registered with Companies House.

Stamp Duty on purchase of own shares

Purchase of your company’s own shares are subject to stamp duty if the consideration for your shares is above £1000, HM Revenue & Customs (HMRC) must stamp the form SH03 before it is to be delivered to Companies House, if the consideration is £1000 or less, your company need not send your form to HM Revenue and Customs to be stamped, but your company must sign and declare that fact on your form.

You may use a single form SH03 to notify Companies House of purchase of shares on different dates and under different contracts.

See accountants advice if you are not familiar with administration for purchase of own shares with Companies House.

PLC cancel shares

Public limited company, abbreviated to PLC, must cancel shares that have been forfeited, surrendered or acquired in various circumstances described in section 662 of the Companies Act 2006. This is generally done within three years, in some cases within one year.

Your PLC can reduce its capital by the nominal value of the cancelled shares, unless the shares or your PLC’s interest in them is disposed of in some other way.

Your directors may reduce your PLC’s capital without a special resolution approved by the court. Your directors must deliver the form SH07 with the statement of capital within one month of your PLC cancel shares to Companies House.

If the reduction in capital results in the nominal value of your PLC’s allotted share capital falling below the authorized minimum required of a PLC, your PLC must re-register as a private limited company.

The time limit for re-registration is the same as that for cancellation of the shares.

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