The process of transfer of share(s) and change of directorship of a Company is normally lodged at the Registry on behalf on the directors of a company by a Certified Secretary of Kenya (CS). Transfer Company Shares in Kenya simplified.
A private limited company’s ownership is decided by the Company’s shareholding. The share of the private limited company would need to be transferred in order to accept new investors or transfer ownership of the company. In this article we shall be looking on how to transfers shares of private limited companies.
In Kenya the following is the procedure used in the transfer of shares as stipulated by the Companies Act 2015.
Similar to a partnership firm, a private limited company is regarded as a “closed corporation” of its members. As a result, the Articles of Association may place restrictions on the transfer of shares in a Private Limited Company. Therefore, before starting the share transfer process, the Company’s Articles of Association must be studied.
There are two forms of restriction on the rights of shareholders to transfer their shares:
The only restrictions that are regarded as legally binding are those found in the articles of association. The corporation and the shareholders are not bound by any private agreements made by the shareholders. Furthermore, only the Articles of Association have the authority to ban share transfers. A private limited company’s right to transfer shares cannot be interpreted as a complete restriction or ban on share transferability.
Once the changes have been affected successfully, the company Secretary requests for the new list of directors(s) and their shareholding by applying for the CR 12 form online through the e-citizen portal.
In order to commence the transfer of shares the following steps must be followed:
Shares must be allocated to current shareholders if any of them approach the company to buy shares. If the current shareholder is not interested or there are extra shares available, they can be transferred to an outsider.
The following procedure must be followed for the transfer of shares to be successful:
1: Acquire a share transfer deed in the necessary format.
This form can be obtained from the Business Registration Service portal online, downloaded and then properly filled.
2: Execute the share transfer deed when the Transferor and Transferee have properly signed it.
After both the transferor and transferee have duly signed the share transfer deed, it can be commissioned where necessary, if no need then taken back to the Registry or uploaded on the e-citizen portal for approval.
3: Stamp the transfer deed form for shares Kenya in accordance with the Stamp Duty Act. Share transfer deed form and stamp duty on transfer of shares in Kenya should be duly completed.
If there is a requirement to pay stamp duty ensure it is paid.
4: Have a witness sign the share transfer deed along with their name, address, and signature.
For execution purposes the transfer deed has to be signed by a witness each one for the Transferor and the Transferee and indicate their name and address as well.
5: Deliver the transfer deed to the company along with the share certificate or letter of allocation.
After the execution of the documents is done, the transfer deed, share certificate and letter of allocation are taken to the Registrar of Companies or the documents are attached(uploaded) on the e-citizen portal for approval by the Registrar.
6: The company must review the paperwork and, if accepted, issue a new share certificate in the transferee’s name.
The process of share transfer or change of directorship in a private limited company is not as tedious as it may seem, once you have the necessary forms and documents executed the process is very seamless.
The corporation and the shareholders are not bound by any private agreements made by the shareholders. Furthermore, only the Articles of Association have the authority to ban share transfers. A private limited company’s right to transfer shares cannot be interpreted as a complete restriction or ban on share transferability. How to transfer shares on e-citizen explained
To transfer the shares to the beneficiary as the transferee, the personal representative, acting as the transferor, must sign a deed of transfer of shares.
Documents Required for Transfer of Shares are:
The restriction essentially represents the idea that if a private company shareholder wants to sell any shares, the current shareholders have a right to be offered those shares first, and that if they decline or don’t act within a certain amount of time, the shares can be sold to a third party.
A witness is required for transfers involving individual shareholders, while a company’s common seal is necessary for transfers involving corporate entities. Individual shareholders who reside outside of the country may designate a proxy to sign on their behalf.