How do I add a shareholder to my limited company?

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I am the sole shareholder of a small software development company in Swansea. I’d like to bring in a colleague as a full partner, and so need to give him a share. How do I go about adding a shareholder, though? What’s the procedure like? Thanks

Answers

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You can add a new shareholder to your company by transferring one or more of your own shares or by creating one or more new shares to sell to them, but you should first check your articles of association for any restrictions on the transfer of issue of shares.

To transfer (sell) existing shares from a current shareholder to the new shareholder, you must:

  1. Fill out a Stock Transfer form with details of the transfer.
  2. Send it to HMRC for Stamp Duty purposes if the sale value is more than £1,000.
  3. Issue a share certificate to the new shareholder.
  4. Retain a copy of the share certificate and Stock Transfer form at the registered office.
  5. Add the new shareholder’s name and address to your company's statutory register of members.
  6. Add the new shareholder’s name and details of the transfer and their shareholdings on the next annual return.

Companies House will update the public register accordingly when the annual return is filed - you do not have to tell them about new shareholders before the annual return is due.

If you do not want to sell existing shares, you will have to create more shares to sell to a new shareholder. To do so, you must:

  1. Complete a Return of Allotment of Shares (Companies House form SH01)
  2. Deliver it to Companies House within one month of the allotment
  3. Issue a share certificate to the new shareholder and retain a copy for the company
  4. Update the statutory register of members with the new shareholder’s details

Companies House will update the public register when form SH01 is filed.

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