Instrument of Transfer

Execution Requirement

The document must be signed by both the transferor and the transferee to be valid under the articles of association of most jurisdictions. This dual signature confirms that the seller is willing to give up the shares and the buyer is willing to accept the rights and obligations that come with them.

Registration Requirement

The company secretary or the board of directors must approve the document before the name of the new owner is added to the official register. This administrative step is the moment when the legal title to the shares actually passes to the buyer. The board may have the power to refuse the registration if the transfer violates specific rules in the shareholder agreement or if the buyer does not meet certain eligibility criteria.

This oversight ensures that the company maintains control over its ownership structure and prevents unauthorized parties from joining the cap table.

Stamp Duty

Tax authorities in many regions require the payment of a levy on the value of the shares before the transfer is recognized as legally binding. The instrument of transfer is presented to the tax office for stamping and the payment of this fee is a prerequisite for updating the records.