[Help] Issuing a company share from a freehold company

[The Andy Naylor Fan Club]

Hi,
I am hoping the power of NSC can come to my rescue again!!! We purchased our flat with a share of the freehold at the end of March this year and a month ago the solicitors acting on our behalf sent some paperwork to the company set up for the freeholders. The paperwork included a share transfer form and share certificate that the seller held. Now the company was only set up by the four freeholders for the sake of transparency and no one has a clue what to do next. I have contacted companies house and changed directors details as was needed but am now unsure whether I can just produce my own share certificate, or get a solicitor to do it for us. I would be grateful for any advice. I have contacted my solicitor to enquire why this was not done between solicitors upon completion. Cheers.

 

[Nottseagull]

Who held the shares on incorporation, and have any of them changed hands since?

 

[Nottseagull]

What four freeholders? Surely the company is the freeholder and there are four leaseholders, although you don't even state if this is for 4 flats/ maisonettes in one block.

 

[The Andy Naylor Fan Club]

Who held the shares on incorporation?

What four freeholders? Surely the company is the freeholder and there are four leaseholders, although you don't even state if this is for 4 flats/ maisonettes in one block!

Who held the shares on incorporation?

Sorry for this missed info. As I understand it there are 4 directors with-in the company, one for each of the 4 flats that make up the block. The company was set up when the 4 owners purchased the freehold via solicitor. This is new to me and a little confusing so please excuse the lack of technical detail. 4 shares were issued to the leaseholders at a nominal value of £1 each. I have the sellers certificate but it is in his name. So this is where I am looking for the info on how to proceed.

 

[Triggaaar]

What four freeholders? Surely the company is the freeholder and there are four leaseholders, although you don't even state if this is for 4 flats/ maisonettes in one block.

I imagine it's 4 flats, the company is the freeholder, and the 4 flat owners are directors of the company, so effectively share ownership of the freehold. But then you knew that.

 

[The Andy Naylor Fan Club]

I imagine it's 4 flats, the company is the freeholder, and the 4 flat owners are directors of the company, so effectively share ownership of the freehold.

Exactly this. What I am asking is does the company issue a share? If so by one of the directors, a solicitor or Companies House?

 

[Nottseagull]

I imagine it's 4 flats, the company is the freeholder, and the 4 flat owners are directors of the company, so effectively share ownership of the freehold. But then you knew that.

Ownership depends on shareholding, not directorships.

4 shares were issued to the leaseholders at a nominal value of £1 each. I have the sellers certificate but it is in his name.

In whose name? ( please don't reply "the seller's name" !)
Do you even have a copy of the certificate of incorporation?

 

[Triggaaar]

Ownership depends on shareholding, not directorships.

Yes, but you know the 4 directors will have equal shares don't you.

 

[Nottseagull]

Yes, but you know the 4 directors will have equal shares don't you.

Sure, that should have happened on incorporation, but the OP is talking about a share(s) being sold to him. To me, that could only be by one of the other shareholders.

 

[SUA Seagull]

When you bought the flat, as part of the conveyancing process your solicitor should have required the seller to complete and sign a stock transfer form, requiring seller's share in the freehold company to be transferred into your name upon completion of your flat purchase.

If that was not done (as appears to be the case from your post) you should now contact your solicitor and arrange for that to be done ASAP. It’s a basic pre-condition to completion which your and the seller’s solicitors should have actioned at that time.

A company issues share certificates. It would normally be a company secretary or a lawyer/accountant acting on behalf of the company. When your freehold company was originally incorporated, I assume that whoever issued the original 4 share certificates will be able to cancel the transferred share (currently in your seller’s name) and issue a new share (in your name). It's easy enough to issue a new share certificate but you need to annul the seller's certificate (via the stock transfer form) so that seller no longer has any ownership rights in the freehold company.

Similarly, you say that you have "changed director's details"; if you are now a director then you (and the other shareholder directors) should ensure that the seller director resigns from the Board.

Your solicitor will be able to advise on all of this and action it for you (so don’t pay them now for their former oversight!). If the seller is no longer contactable then I'm not sure what happens in such circumstances. You can make that your solicitor's problem as he/she should have dealt with this at completion!

 

[The Andy Naylor Fan Club]

Sure, that should have happened on incorporation, but the OP is talking about a share(s) being sold to him. To me, that could only be by one of the other shareholders.

It's a transfer of a share from the previous shareholder to myself. I have his share but it is in his name. I think that I need to get a new one issued in my name. Thanks.

 

[The Andy Naylor Fan Club]

When you bought the flat, as part of the conveyancing process your solicitor should have required the seller to complete and sign a stock transfer form, requiring seller's share in the freehold company to be transferred into your name upon completion of your flat purchase.

If that was not done (as appears to be the case from your post) you should now contact your solicitor and arrange for that to be done ASAP. It’s a basic pre-condition to completion which your and the seller’s solicitors should have actioned at that time.

A company issues share certificates. It would normally be a company secretary or a lawyer/accountant acting on behalf of the company. When your freehold company was originally incorporated, I assume that whoever issued the original 4 share certificates will be able to cancel the transferred share (currently in your seller’s name) and issue a new share (in your name). It's easy enough to issue a new share certificate but you need to annul the seller's certificate (via the stock transfer form) so that seller no longer has any ownership rights in the freehold company.

Similarly, you say that you have "changed director's details"; if you are now a director then you (and the other shareholder directors) should ensure that the seller director resigns from the Board.

Your solicitor will be able to advise on all of this and action it for you (so don’t pay them now for their former oversight!). If the seller is no longer contactable then I'm not sure what happens in such circumstances. You can make that your solicitor's problem as he/she should have dealt with this at completion!

Thank you very much for this info. I am at work at the moment but I do believe that a signed stock transfer form is among the paperwork sent to the company. I really appreciate your time and help as now I can contact the solicitor who helped set up the freehold company and finally put this to rest. As I mentioned in my opening post I thought myself that this should have been dealt with between solicitors at the time.

 

[Nottseagull]

You really have to question why the company was set up with only one share issued for each leaseholder. If a couple who own a flat split up, the one whose name comes second on the share certificate loses their voting rights to their former partner.

 

[The Andy Naylor Fan Club]

When you bought the flat, as part of the conveyancing process your solicitor should have required the seller to complete and sign a stock transfer form, requiring seller's share in the freehold company to be transferred into your name upon completion of your flat purchase.

If that was not done (as appears to be the case from your post) you should now contact your solicitor and arrange for that to be done ASAP. It’s a basic pre-condition to completion which your and the seller’s solicitors should have actioned at that time.

A company issues share certificates. It would normally be a company secretary or a lawyer/accountant acting on behalf of the company. When your freehold company was originally incorporated, I assume that whoever issued the original 4 share certificates will be able to cancel the transferred share (currently in your seller’s name) and issue a new share (in your name). It's easy enough to issue a new share certificate but you need to annul the seller's certificate (via the stock transfer form) so that seller no longer has any ownership rights in the freehold company.

Similarly, you say that you have "changed director's details"; if you are now a director then you (and the other shareholder directors) should ensure that the seller director resigns from the Board.

Your solicitor will be able to advise on all of this and action it for you (so don’t pay them now for their former oversight!). If the seller is no longer contactable then I'm not sure what happens in such circumstances. You can make that your solicitor's problem as he/she should have dealt with this at completion!

Double post.

 

[The Andy Naylor Fan Club]

You really have to question why the company was set up with only one share issued for each leaseholder. If a couple who own a flat split up, the one whose name comes second on the share certificate loses their voting rights to their former partner.

Thanks for the heads up. I shall make make sure my wife's name is after mine on our certificate.

 

[WilburySeagull]

Thanks for the heads up. I shall make make sure my wife's name is after mine on our certificate.

I was co. sec for a freehold company. There can only be a single share for a jointly owned flat othetwise two joint leaseholders could out vote others. It is true that a stock transfer should have been done and your solicitor should hav made sure of this. However if you check the company rules you will most likely find that only leaseholders can be shareholders. The co. sec can certainly issue a share certificate in your name(s).

 

[Lankyseagull]

As a former Director & Company Secretary of a resident's company comprising 12 flats, the advice you have had from SUA Seagull & Wilbury Seagull is correct.

The company should have a Company Secretary who has the responsibility of informing Companies House of changes in directorships and also handling inquiries relating to stock transfers from solicitors. Do you know which of your neighbours fulfils this role? It may be that for some reason they are behind with this important piece of paperwork.

 

[Nottseagull]

I was co. sec for a freehold company. There can only be a single share for a jointly owned flat othetwise two joint leaseholders could out vote others.

A company can issue as many shares as it likes. In this case, as long as the number is divisible by 4 and distributed equally, why would it matter?

The company should have a Company Secretary

That requirement was withdrawn several years ago, although a director must ensure their duties are still fulfilled.

 

[Triggaaar]

Sure, that should have happened on incorporation, but the OP is talking about a share(s) being sold to him. To me, that could only be by one of the other shareholders.

Yes, because he's bought a flat from one of them, so they no longer need to be a joint freeholder.

 

[WilburySeagull]

A company can issue as many shares as it likes. In this case, as long as the number is divisible by 4 and distributed equally, why would it matter?


That requirement was withdrawn several years ago, although a director must ensure their duties are still fulfilled.

A company can only issue shares in accordance with its articles of association not just as it likes. Inthe case of Freehold co it is important to understand that a leaseholder is the owner or owners of each flat. Just because there may be two or more joint owners of a single flat they are not entitled to individual shares. The share goes with the flat and must be in the name of all the owners of the lease.