[Help] Issuing a company share from a freehold company

[Lankyseagull]

That requirement was withdrawn several years ago, although a director must ensure their duties are still fulfilled.

Yes, you're right, I should have added 'or a Director who fulfils the role'. My point still stands though that one of his neighbours must have responsibility for doing all the paperwork on behalf of the Company, including ensuring any annual accounts are prepared & submitted as appropriate.

 

[Weststander]

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!

I didn’t think that a share is cancelled as such. Instead, share no 1, 2, 3 or 4 (in this case) is transferred to the new leaseholder. As you advise, using a J30 stock transfer form. The original 4 issued shares remain ad infinitum.

Two more bits of admin necessary:
1. The Company Registers need to be updated in several places to reflect the transfer and details of the new owner. These might be held by an accountant, solicitor or a trusted leaseholder.
2. The next Annual Confirmation Statement filed with Companies House should show the share transfer out from the old shareholder, plus the new shareholder’s details with the single share transferred to them.

 

[pearl]

I didn’t think that a share is cancelled as such. Instead, share no 1, 2, 3 or 4 (in this case) is transferred to the new leaseholder. As you advise, using a J30 stock transfer form. The original 4 issued shares remain ad infinitum.

Two more bits of admin necessary:
1. The Company Registers need to be updated in several places to reflect the transfer and details of the new owner. These might be held by an accountant, solicitor or a trusted leaseholder.
2. The next Annual Confirmation Statement filed with Companies House should show the share transfer out from the old shareholder, plus the new shareholder’s details with the single share transferred to them.

The original 4 issued shares remain ad infinitum, with the first share holders names?
I'm the Secretary (God help us) for our freehold company and I have been tearing a new certificate out of the book thing every time there's a new leaseholder. I think I have the original certs (somewhere).

 

[Tom Hark Preston Park]

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 actual share certificate seems to me to be somewhat symbolic. Our house of six flats and six shareholders manage ourselves. When somebody sells a flat on, we issue the new shareholder with a new certificate (and emboss it using the official company stamp/template thing issued by Companies House when the company was set up - tho not sure if they still issue those). We also record the transfer of the share via the annual Companies House Confirmation Statement (formerly call the Annual Return). I've been doing the admin stuff for our house for a good few years now, have done a fair few of those share transfers and it's never been a problem. Sometimes the departing shareholder's certificate is available, sometimes it's not. Either way, we issue the new new shareholder with a new certificate with the shareholder's name on. As I say, seems to me the actual certificate is largely symbolic, and any certificate in the required format, signed by one or more company directors, will be valid, just so long as the Companies House share transfer is recorded, ideally at the time of transfer or failing that at time of preparing the Confirmation statement.

 

[The Andy Naylor Fan Club]

The actual share certificate seems to me to be somewhat symbolic. Our house of six flats and six shareholders manage ourselves. When somebody sells a flat on, we issue the new shareholder with a new certificate (and emboss it using the official company stamp/template thing issued by Companies House when the company was set up - tho not sure if they still issue those). We also record the transfer of the share via the annual Companies House Confirmation Statement (formerly call the Annual Return). I've been doing the admin stuff for our house for a good few years now, have done a fair few of those share transfers and it's never been a problem. Sometimes the departing shareholder's certificate is available, sometimes it's not. Either way, we issue the new new shareholder with a new certificate with the shareholder's name on. As I say, seems to me the actual certificate is largely symbolic, and any certificate in the required format, signed by one or more company directors, will be valid, just so long as the Companies House share transfer is recorded, ideally at the time of transfer or failing that at time of preparing the Confirmation statement.

Excellent. Thanks for the info. My neighbour handles the confirmation statement information due to the fact no other shareholder wants anything to do with the admin side of things. I sent an email to all 3 remaining shareholders and have had no response apart from my neighbour, so it looks as though the other 2 ( they rent their properties out) are choosing to ignore this situation. I am frustrated as to why my solicitor hadn't dealt with this and the fact that when I asked what needed to be done I got an email back from them saying "As the letter they sent was addressed to the company and the company are not clients, then they can not offer legal advice!"
This is the solicitors that I had another thread about who overcharged us £860 dealing with this property purchase.

 

[Weststander]

The original 4 issued shares remain ad infinitum, with the first share holders names?
I'm the Secretary (God help us) for our freehold company and I have been tearing a new certificate out of the book thing every time there's a new leaseholder. I think I have the original certs (somewhere).

It's two different aspects.

1. The same individual shares in the company (a non physical thing), numbers 1, 2, et seq, should remain in existence forever. No change.
2. But their holder alters every time a leaseholder sells, I agree leading to the issue of a new physical share certificate.

The legal transaction is a share transfer. Not a new issue and simultaneous cancellation of share capital.

 

[Weststander]

The actual share certificate seems to me to be somewhat symbolic. Our house of six flats and six shareholders manage ourselves. When somebody sells a flat on, we issue the new shareholder with a new certificate (and emboss it using the official company stamp/template thing issued by Companies House when the company was set up - tho not sure if they still issue those). We also record the transfer of the share via the annual Companies House Confirmation Statement (formerly call the Annual Return). I've been doing the admin stuff for our house for a good few years now, have done a fair few of those share transfers and it's never been a problem. Sometimes the departing shareholder's certificate is available, sometimes it's not. Either way, we issue the new new shareholder with a new certificate with the shareholder's name on. As I say, seems to me the actual certificate is largely symbolic, and any certificate in the required format, signed by one or more company directors, will be valid, just so long as the Companies House share transfer is recorded, ideally at the time of transfer or failing that at time of preparing the Confirmation statement.

Exactly!!

 

[Tom Hark Preston Park]

Excellent. Thanks for the info. My neighbour handles the confirmation statement information due to the fact no other shareholder wants anything to do with the admin side of things. I sent an email to all 3 remaining shareholders and have had no response apart from my neighbour, so it looks as though the other 2 ( they rent their properties out) are choosing to ignore this situation.

A word to the wise: don't allow your 2 absent shareholders to just opt out of taking an active part in the company. We've got a mix of shareholders who live in situ and others who rent their properties out. The renter-outers are retired people who rightly regard their flat as their nest egg and are keen to play an active part. It's not just a case of renting out and watching the money roll in. There's all sorts of other stuff they need to be actively involved in. Things such as selecting a property management company or (preferable in my view) selecting your own tradesmen for everything from gardening to giving the place a periodic redecorate, as well as things like insuring the property. You will hopefully have set up a company bank account and all be contributing an agreed amount each month (maybe with slight variation depending on number of bedrooms) to cover both regular and unexpected costs. Your fellow shareholders should on no account be allowed to just opt out of participating in decisions that affect you all. If they're smart, they'll realise that it safeguards their own interests as well as the interests of those who live in the house. Good luck!

 

[pearl]

It's two different aspects.

1. The same individual shares in the company (a non physical thing), numbers 1, 2, et seq, should remain in existence forever. No change.
2. But their holder alters every time a leaseholder sells, I agree leading to the issue of a new physical share certificate.

The legal transaction is a share transfer. Not a new issue and simultaneous cancellation of share capital.

'Phew, that's great, thank you so much

 

[pearl]

The actual share certificate seems to me to be somewhat symbolic. Our house of six flats and six shareholders manage ourselves. When somebody sells a flat on, we issue the new shareholder with a new certificate (and emboss it using the official company stamp/template thing issued by Companies House when the company was set up - tho not sure if they still issue those). We also record the transfer of the share via the annual Companies House Confirmation Statement (formerly call the Annual Return). I've been doing the admin stuff for our house for a good few years now, have done a fair few of those share transfers and it's never been a problem. Sometimes the departing shareholder's certificate is available, sometimes it's not. Either way, we issue the new new shareholder with a new certificate with the shareholder's name on. As I say, seems to me the actual certificate is largely symbolic, and any certificate in the required format, signed by one or more company directors, will be valid, just so long as the Companies House share transfer is recorded, ideally at the time of transfer or failing that at time of preparing the Confirmation statement.

I agree with all of that, except the last 9 words. Companies House have a time scale (as I discovered recently) so best to let them know any changes soon as.