Whatever your reason for wanting to sell shares, it\u2019s important to first check the articles of association, refer to any shareholders\u2019 agreement<\/a> that exists, and then decide whether issuing or transferring shares is in the best interests of the company and its members<\/p>\n You can sell shares in a private limited company in one of two ways – by transferring existing shares or by issuing new shares.<\/p>\n A share transfer is where a shareholder sells their existing shares in a company. By doing so, you can release personal equity or remove yourself entirely from the business without diluting the value of all the other shares.<\/p>\n The quantity of shares and percentage of equity that each shareholder owns in the company remains unchanged after a share transfer. As does the company\u2019s share capital. You\u2019re not adding more shares or capital – the ownership of existing shares is simply changing hands.<\/p>\n Shares can only be transferred from one person to another after company formation.<\/p>\n Issuing shares, also known as \u2018allotting\u2019 shares, is the process of creating new shares. All limited by shares companies issue shares during the company formation process.<\/p>\n You can also allot new shares after incorporation if there aren\u2019t enough existing ones to facilitate a transfer, or if it\u2019s simply not ideal to distribute existing shares.<\/p>\n Issuing shares when setting up a company – know your options<\/span><\/a>\n \n By issuing and selling new shares, you can increase your company\u2019s share capital without the need for any member to sell their existing shareholdings.<\/p>\n However, when you increase the number of shares in your company, you will dilute the value of every existing share. This is because each share represents a percentage of the company. So, the more shares there are, the less each one is worth.<\/p>\n Whether you decide to sell shares by allotting new ones or transferring existing ones, the transfer process must be carried out in accordance with the rules and regulations set out in the articles of association and shareholders\u2019 agreement.<\/p>\n The rules and restrictions on share allotments and transfers are set out in your company\u2019s articles of association and\/or shareholders\u2019 agreement. This includes provisions on who you can and cannot sell shares to.<\/p>\n Small companies often adopt model articles of association, which includes very few restrictions on selling shares. If you have model articles<\/a>, you are free to sell or give away shares to anyone you want. The only stipulation is that the director(s) must approve the allotment or transfer.<\/p>\n Understanding limited company shares<\/span><\/a>\n \n Selling shares is relatively straightforward if you are the sole shareholder and director of the company. You have full ownership and control of the entire business, so you don\u2019t have to ask anyone else for permission before selling shares.<\/p>\n However, if you\u2019re one of many shareholders in a private limited company, you may find that the articles and a shareholders\u2019 agreement include restrictions on how, when, and to whom shares can be sold.<\/p>\n The most common types of restrictions that you can include in your company\u2019s articles and shareholders\u2019 agreement are:<\/p>\n If you own a company with at least one other person, it would be prudent to include at least some of these provisions within your articles and shareholders\u2019 agreement. By doing so, you can effectively regulate ownership, ensuring that only the right people have influence and control in the company.<\/p>\n The easiest way to sell shares is to transfer existing ones. To do this, you will normally need to complete a J30 stock transfer form<\/a> with the following details of the sale:<\/p>\n If the share transfer is exempt from Stamp Duty tax, or there is no chargeable consideration, you must fill in one of the certificates on the reverse of the stock transfer form.<\/p>\n Complete Certificate 1 if:<\/p>\n Complete Certificate 2 if:<\/p>\n There is no need to complete either certificate if Stamp Duty relief is being claimed or no consideration is given for the shares. However, where a relief is being claimed, the stock transfer form and details of Stamp Duty relief must be sent to HMRC for consideration before presenting the form to the company.<\/p>\n How to transfer company shares<\/span><\/a>\n \n Depending on the articles and shareholders\u2019 agreement, either the company director(s) or shareholders will review the stock transfer form and decide whether or not to approve it.<\/p>\n If the transfer is approved, the new shareholder will be the rightful owner of the shares. The company will issue a share certificate to the new shareholder and record their details in the statutory register of members.<\/p>\n Companies House will be notified of the share transfer as part of the next confirmation statement<\/a>, at which point the public register of companies will be updated accordingly.<\/p>\n If you decide to issue new shares, you will need to complete a \u2018return of allotment of shares\u2019 on Companies House form SH01<\/a>. To do this, you must provide the following information:<\/p>\n This form must be filed at Companies House online or by post within one month of the allotment.<\/p>\n You must issue share certificates to each member who purchased new shares and update the statutory register of members accordingly.<\/p>\n You do not have to update shareholder information until it’s time to file your confirmation statement.<\/p>\n At Quality Company Formations, we offer a professional Transfer of Shares Service<\/u><\/a> and an Issue of Shares Service<\/u><\/a>. These are available to new and existing customers.<\/p>\n Both services include all compliance paperwork, such as minutes of meetings and share certificates. We can also prepare and file a confirmation statement as part of your order for an additional cost of just \u00a345.99.<\/p>\n If you\u2019d like to find out more about these services or have any questions about selling shares in a limited company, please contact us or leave a comment below.<\/p>\n Difference between transferring shares and issuing shares<\/h3>\n
Transferring shares<\/h4>\n
Issuing shares<\/h4>\n
Can I sell shares to anyone I want?<\/h3>\n
Restrictions when issuing and transferring shares<\/h4>\n
\n
Completing the share transfer procedure<\/h3>\n
\n
\n
\n
Completing the share allotment procedure<\/h4>\n
\n
Ready to sell shares in your private limited company?<\/h3>\n
![\"Fully](\"https:\/\/cdn-quality.s3.eu-central-1.amazonaws.com\/assets\/custom\/images\/blog\/qcf-blog_sidebar.png?v=4\"\n)
\n ![\"Fully](\"https:\/\/cdn-quality.s3.eu-central-1.amazonaws.com\/assets\/custom\/images\/blog\/qcf-blog_banner.png?v=4\"\n)
\n <\/a>\n <\/div>\n \n"},"excerpt":{"rendered":"