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Send Us An EmailThe Procedures for the Transfer and Transmission of Shares in BC | Stevens Law
The term “shares” refers to the units of ownership interests in a particular company. The shares in question here make up a company’s share capital. The good thing about company shares in British Columbia, particularly the ones in a Private Limited Company or a Limited Company, is that they are transferable. That is, they can be transferred voluntarily from one entity to another.
When we say that the transfer of shares in both
Private Limited Company and Limited Companies are voluntary, we mean that the
transfer of ownership is free and can be done at the owner's digression. Of
course, some other factors can cause an involuntary change in shares ownership;
for instance, the death of a shareholder, etc.
Concept
of Transfer and Transmission of Equity Shares
One thing to note is that transferring and
transmitting shares are different. The former can be regarded as the process
whereby a shareholder willingly transfers the shares in a company to another
party, i.e., transferor to a transferee. On the other hand, the latter
(transmission) refers to a situation whereby the ownership of a share is
changed, determined, or reassigned by the law. Many factors can facilitate the
transmission of shares by the Operation of Law. For example;
- The death of a member or a shareholder
- The transmission also happens
when a member gets adjudicated Insolvent
- When the court of law orders it
- When a company has been
amalgamated, the new company then issues new shares.
- When a company merges with
another company, or it goes into liquidation, the Member of such company
will also be affected
- When a member becomes mentally unstable or got
terminally ill.
In essence, shares transfer involves two
entities, while the court of law does the transmission of shares.
Types of Shares
Companies in BC can issue various kinds of
shares, but out of all these types of shares, only two are common. They include
preference share and Ordinary share.
Preference Shares: This type of share is one of the commonest in
British Columbia because of its perks. This type of shareholder is entitled to
a fixed dividend (fixed amount of money). Not only this, but preference
shareholders also get paid before the ordinary shareholders. Lastly, preference
shareholders often get paid a certain amount, according to a fixed percentage.
Ordinary Shares: This class is the direct opposite of preference
shares. In that holders of this share are not entitled to a fixed dividend,
they are not always a priority of the company, and they do not get paid before
preference shareholders.
Who Can Transfer Shares?
A shareholder can be seen as someone or an
entity holding at least one company share. Under the provision of the law,
anybody can be a shareholder, including a minor. The only limitation of a minor
being a shareholder is that they cannot enter a binding contract to sell or
transfer their shares.
Also, anybody can sell or transfer the shares
that they hold. And also, when it comes to transferring properties or shares,
it can be in the form of a sale or gift. A shareholder may decide to sell his
property or company shares at a given price. They can also decide to gift an
entity their shares. However, whichever the shareholder decides on, they must
follow the laid down rules and regulations of the company to which they own the
shares.
As a shareholder, if you are willing to sell
your shares, the best way to do that is to hire a proxy or an agent. This agent
will enter a binding contract through a power of attorney to sell or transfer
your shares to interested parties.
However, a company that an entity owns a share
in may forbid one from transferring or selling their shares if they had already
included the right of first offer clause in their Articles of Association.
Suppose you or your attorney notice that you have this clause already in the
contract before you sell or transfer to another party. In that case, you must
inform them about their availability before informing other parties. If the
company is interested, they will buy it; if they are not, they will allow you
to sell it to other parties.
Basic Procedure for the Transmission
and Transfer of Share
A shareholder may choose to sell part or their
entire shareholding interest. The transferor or the transferee can initiate
this transfer. If a shareholder wants to sell their entire shares in British
Columbia, they will follow this process:
First, the law will require them to fill out a Share
Transfer Form in favor of the new shareholder. Then after this, the form
and share certificate must be submitted to the company they owe the share.
After this, the company will issue a new certificate to the purchaser, whose
name will now appear on the register of members of the company.
Transferring part shares will also take the same
route. A shareholder will fill out a form (Share Transfer Form) acknowledging
that they want to transfer half of their shares to a new entity. One of the
things that will be included in this form is the number of shares the
shareholder is transferring and how much the sale cost (if it is not a gift).
After submitting, the company will now issue two share certificates to the
shareholder whose shares have been transferred and the purchaser.
Transmission of shares, on the other hand, is
initiated by a Legal heir or receiver. The legal heir will file an application
with the company. Vital documents, such as the death certificate, probate,
succession certificate, etc., will be attached to the application. After
submitting it to the company, the company will then review the documents to
check their legality, and if found genuine, they will approve the transmission
request.
Conclusion
The procedure for transferring and transmitting
shares in private companies in British Columbia is complex. If you are planning
on transferring or transmitting your shares, it is important to seek legal
advice from a qualified lawyer. Steven and
Company Law Corporation can help you with all aspects of the transfer and transmission of
shares, including preparing the necessary documentation and advising you on the
tax implications of the transaction. Contact us at 1-250-248-8220 today to find out how
we can help you with your share transfer or transmission.
