In this guide and the resolution template, the shareholder intending to transfer their shares will be referred to as the “transferor”, while the shareholder intending to receive the transferred shares will be referred to as the “transferee”.
Preamble to the Resolution
The preamble to the resolution would typically describe the proposed transaction in brief. For example, it could state that the transferor has entered into an instrument of transfer with the transferee to transfer X number of shares.
Resolution Approving the Transfer of Shares
Once the instrument of transfer has been executed (i.e. signed by an authorised person, such as a director), the transferor would then make a written share transfer request to the Board of Directors (the “Board”).
The company’s constitution usually provides that share transfers can only take place with board approval. For example, clause 26 of the Model Constitution states that the directors may decline to lodge a Notice of Transfer of shares if the directors do not approve of the transferee.
If the Board approves the transfer, it will issue a board resolution to this effect. This resolution will state that the Board approves the transfer of shares, subject to the Share Transfer Form being fully-stamped (i.e. fully paid), as stamp duty will have to be paid when shares are transferred.
The party paying stamp duty should submit a Share Transfer Form to the Inland Revenue Authority of Singapore (IRAS) for stamping (i.e. for paying the relevant stamp duty).
The transferor will also have to surrender their original share certificate to the company. Upon receipt of the share certificate, the Board will submit a Notice of Transfer to the Accounting and Corporate Regulatory Authority (ACRA) through the BizFile+ website.
The transfer will only be effective once ACRA has updated its electronic register of company members.
The resolution would also typically provide that, upon the registration of the share transfer, a share certificate be issued to the transferee.
In relation to any documents that would have to be in writing under seal, such as the share certificate, this resolution would also grant the authority to either affix the company’s common seal, or rely on section 41B of the Companies Act which provides that a company may execute a deed without a common seal by signature:
- On behalf of the company by a director of the company and a company secretary;
- On behalf of the company by at least 2 directors of the company; or
- On behalf of the company by a director of the company in the presence of a witness who attests the signature.
Template for Resolution to Transfer Shares
Need a template for resolutions passed to transfer shares? You can get one here.