Q&As

When does title pass from the seller to the buyer in a sale of shares?

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Published by a ³ÉÈËÓ°Òô Corporate expert
Published on: 27 November 2013
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Legal and beneficial title

Title to shares in a company comprises both the legal interest (a concept of the common law) and the beneficial interest (a concept of equity) in those shares.

The beneficial title will transfer to the buyer when the seller and the buyer enter into a written or oral agreement for the sale of the shares that is:

  1. •

    unconditional, or

  2. •

    conditional and that contract becomes unconditional

For example agreements, see precedents: Share purchase agreement—pro-buyer—corporate seller—unconditional—long form and Share purchase agreement—pro-buyer—corporate seller—conditional—long form.

The transfer of the legal title to the shares does not take place until the name of the transferee (ie the buyer) is entered into the target company's register of members. The instrument of transfer (stock transfer form) must be executed by the seller and stamped at the Stamp Office following payment of stamp duty by the buyer. The register of members should only

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Jurisdiction(s):
United Kingdom
Key definition:
Shares definition
What does Shares mean?

The CA 2006 merely provides that a share is a share in the company's share capital. A company's share capital comprises the number of shares issued by it to investors either on or after incorporation. Those investors then become the shareholders in the company. A shareholder’s shares are their personal property. By contrast, the assets of a company are owned by the company itself. Owning shares does not entitle a shareholder to any property rights in the company's assets.

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