Completion will be a significant milestone in any transaction, however it is important to bear in mind that there will still be much to do in order to best ensure that the deal will be a success.
Arguably, much of the hard work will have been done, however there are a number of necessary formalities which must be complied with in order to solidify the transaction. We look at a few of these below:
Stamp duty is a tax incurred on documents transferring the title over certain types of property. Most people are familiar with stamp duty as a tax on the transfer of land. Within the context of a share purchase, the stock transfer form(s) will be used to transfer title in the shares from the Seller to the Buyer. Once executed, the form(s) will have to be delivered to HM Revenue & Customs, along with payment. At present, stamp duty is currently payable at 0.5% of the consideration for the shares, rounded up to the nearest £5. This is subject to a minimum aggregate value of £1,000. This payment must be made within 30 days from the execution of the stock transfer forms.
The transaction may involve the execution of one or more Companies House forms to detail and change in directorships or give notice of an addition or removal of a PSC (person of significant control). Any such form must be submitted to Companies House within 14 days of completion of the transaction.
Written resolutions passed by the company will also need to be filed at Companies House. This applies to all special resolutions, and in the case of ordinary resolutions, this will include any allotment or buyback of a company’s issued share capital.
Statutory Registers and Share Certificates:
Following receipt of the duly stamped stock transfer forms from HM Revenue & Customs, the target company must, within 2 months from the date of completion:
- update its register of members and register of transfers, and
- deliver a new share certificate to the buyer in respect of their new shareholding.
The statutory registers of the company must be updated to reflect the transfer; the legal interest in the shares will not vest in the Buyer until this point.
Once all of the transaction documents have been signed, witnessed and stamped as appropriate, either the Buyer’s or Seller’s solicitors will be tasked with compiling a bundle of copies of each document (commonly referred to as the ‘transaction bible’). Once complete, a copy of the transaction bible will normally be distributed to each party for their records.
There are a multitude of other considerations that are equally as important, however in the limited space that we have here, the above is intended as an indicator of the headlines.
If you are looking to buy or sell a business or shares in a company and would like to discuss how we can help you with this process, please contact Simon Porter in BakerLaw’s Company and Commercial department at firstname.lastname@example.org or call 01252 730754.
This article is not a definitive statement of the law. It is designed as a free update on the law at the time of publishing. It is not a substitute for legal advice on specific facts and circumstances. BakerLaw LLP and/or the writer accepts no liability or responsibility for reliance on this article and recommends that you seek independent legal advice on your specific circumstances prior to taking any steps.