In any registered company, a time will come when the management of the company must either transmit or transfer shares or do new allotment or the shareholders surrenders shares.
What is Transmission of Shares? It is the handing over of shares of a shareholder upon his death or if he or she is adjudicated to be insolvent in the case of a shareholder who is a company if it goes into liquidation.
Transmission of shares usually occurs when the shareholder of a company dies, the shares of the dead person will be transmitted to the legal representatives or heirs or successors-in-title.
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A transfer of shares is the process of transferring ownership of shares from one person to another. The person who transfers the shares is called the transferor, and the person who receives the shares is called the transferee Transfer of shares comes to play when a shareholder is removed and his shares transferred to an existing shareholder or a new shareholder. In a public company the process of the transfer are as follows:
- Prepare an instrument of transfer: The transferor and transferee must sign the instrument of transfer.
- Deliver the instrument to the company: The instrument of transfer must be delivered to the company within a specified time frame.
- Notify the company: The transferor and transferee must inform the company of the transfer.
- Register the transfer: The company will register the transfer and issue a new share certificate to the transferee. The transferee’s name will also be added to the company’s register of members.
In some cases, shares may be transferred by operation of law, such as when a company is wound up.
Shares may be transferred for a variety of reasons, including: As part of a divorce settlement, to pass on wealth to children, and for tax purposes.
A share surrender is when a shareholder voluntarily returns their shares to the company that issued them. This is different from selling or transferring shares, which are ways to give up a shareholder’s interest in a company.
Share surrender on the other hand, is the surrender of shares back to the company by an individual or corporate body who subscribed for shares in the company. The first step in share surrender is for the shareholder to write a letter to the company stating the amount surrendered. Also, a special resolution by the company would be prepared to reflect the shareholder’s intention to surrender the shares back to the company and the number of shares so surrendered, it would also reflect the new share structure of the company. Finally, the application for share surrender would be filed with the Corporate Affairs Commission (CAC).
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A new allotment of shares is when a company allocates a specific number of shares to an applicant. Sometimes a private company or public company may increase their share capital thereby requiring that the shares be allotted to new subscribers or old subscribers. The process of allotting the shares is called new allotment.
Here’s what happens when a company allots shares:
- The company adds the applicant’s name to the register, opposite the numbered shares.
- The company seals and delivers a share certificate to the applicant for the number of shares.
- The shares are then considered issued.
PROCESS OF TRANSMISSION, TRANSFER, SURRENDER AND NEW ALLOTMENT OF SHARES.
The above are regarded as post incorporation matters. Meaning they can only be done after the company have been incorporated. The process of getting it done is simple; just log on to post incorporation of CAC and fill in the necessary details. Note that you must be an accredited agent of CAC to get the process completed.
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