Transferring shares in a limited company in the UK is a significant decision that can impact its ownership structure, financial standing, and operational control. Whether you are a small business owner, an investor, or a stakeholder, having a thorough understanding of how to transfer shares in a limited company is crucial to ensure a smooth and legally compliant transaction. 

In this blog, we will discuss the complexities of transferring shares in limited companies, highlighting key steps, best practices, and common pitfalls you should avoid to ensure a smooth transfer process.

Understanding the Share Transfer Process in UK Limited Companies 

In the UK, the transfer of shares in a limited company is governed by the Companies Act 2006 and the company’s articles of association. These legal documents outline the rules and procedures for share transfers, ensuring that all parties involved adhere to statutory requirements and the organisation’s internal regulations. 

The Companies Act 2006 mandates that every company must maintain a register of its members, which records the details of shareholders and their shareholdings. Furthermore, any share transfer must be documented and reflected in this register. Failing to comply with these legal requirements can lead to penalties and complications during future transactions.

The difference between transferring and issuing shares

It’s important to distinguish the difference between transferring and issuing shares. Transferring shares involves changing the ownership of existing shares from one party to another. This process does not alter the total number of shares in the company. 

Conversely, issuing shares refers to creating and distributing new shares, which increases the company’s share capital. Understanding this distinction is vital for ensuring that the correct procedures are followed for each action.

Steps Involved in the Share Transfer Process

Transferring shares in a limited company involves several steps. They are:

1. Reviewing the articles of association

Before initiating a share transfer, you should review your company’s articles of association to understand any specific provisions or restrictions related to share transfers. Some articles may include pre-emption rights, which give existing shareholders the right to purchase shares first before they are offered to external parties.

2. Paying stamp duty (if applicable)

We would recommend getting specialist advice on whether stamp duty is payable on the transfer.  

3. Update the register of members

Once the transfer is completed and any required stamp duty is paid, update your company’s register of members to reflect the new ownership. The transferee’s details should be entered, and the transferor’s shareholding should be adjusted accordingly.

4. Issue share certificates

Provide the transferee with a new share certificate as evidence of their ownership. The old share certificate held by the transferor should be cancelled or updated to reflect the change.

5. Notify Companies House

If new shares have been issued as part of the transfer, you must notify Companies House by submitting a Return of Allotment of Shares.

Best Practices for Ensuring a Smooth Share Transfer 

Ensuring a smooth share transfer in a limited company requires meticulous planning and adherence to best practices. By following these guidelines on how to transfer shares in a limited company, you can avoid common pitfalls and facilitate a seamless transition.

1. Comprehensive planning

Proper planning is essential to avoid potential issues during the share transfer process. Start by thoroughly reviewing your company’s articles of association and any shareholders’ agreements to understand all relevant provisions and restrictions. This will help you identify any potential obstacles and ensure that the transfer process complies with all legal and internal requirements.

2. Seeking professional advice

Getting a shareholder agreement in place early is critical, as this sets out the rules on how a transfer can take place.  Most companies we deal with at BEB wish to put in place “cross option” clauses, giving the existing shareholders first refusal to buy the others out.  This gives peace of mind, knowing they wouldn’t be running the company with a stranger in the event of a transfer.  We can also add similar provisions to cover various worst-case scenarios, such as the death of a shareholder.  Seeking professional advice is key and enables you to have these awkward conversations openly with all the shareholders.

3. Ensuring proper record-keeping

Maintaining accurate and up-to-date records is vital to ensuring compliance and transparency. Ensure that all relevant documents, such as the updated register of members and new share certificates, are properly filed and stored. Good record-keeping practices not only facilitate smooth transactions. They also provide a clear audit trail in case of future disputes or regulatory inspections.

4. Open communication and transparency

Clear and open communication with all parties involved in the share transfer is essential for preventing misunderstandings and disputes. Inform existing shareholders of the proposed transfer and address any concerns they may have. Transparency helps build trust. It also helps ensure that everyone is on the same page to reduce the likelihood of conflicts.


Transferring shares in a limited company is a multifaceted process that requires careful attention to legal, financial, and administrative details. By understanding the regulatory framework, following the correct procedures, and adhering to best practices, you can ensure a smooth and successful share transfer. 

Whether you are a business owner looking to transfer shares to a family member, an investor seeking to restructure your portfolio, or a limited company director facilitating a change in ownership, we at BEB can offer you the professional guidance you require. Get in touch with us to receive personalised support tailored to your needs.