Meaning
Statutory provisions in Bermuda prohibit a registered company from registering a transfer of shares unless a proper instrument of transfer has been delivered to the company. Under the Bermuda Companies Act Section 67, this requirement ensures that no verbal or undocumented transactions can alter the official register of members. The rule holds except where the transfer is executed pursuant to other statutory mechanisms such as a vesting order.
Delivery Requirement
Parties to an equity transaction must prepare a written instrument of transfer and execute it before presenting it to the company. This document is a prerequisite for any update to the share ledger under the Bermuda Companies Act Section 67. The company’s secretary must hold this physical or electronic document before making any changes.
Transfer Restriction
Directors are barred from updating the member ledger until they receive the executed transfer instrument. This protective barrier under the Bermuda Companies Act Section 67 protects the company from competing claims of share ownership.
Board Discretion
While the provision demands a written instrument, it does not strip the directors of their separate power to refuse registration under the company’s bylaws. They may reject a validly executed transfer if the transferee does not meet the criteria in the articles of association, even if the parties have complied with the Bermuda Companies Act Section 67. This preserves the board’s control over the shareholder base.
