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| Commentary

Certificated Shares

| Commentary

Certificated shares: form of transfer

The formalities of a transfer of shares1 are, in general, regulated by the articles and, when applicable, the Stock Transfer Act 1963. Section 770(1) of the Companies Act 20062 provides that, notwithstanding anything in the articles, a 'proper instrument of transfer' must be delivered to the company; otherwise the company is prohibited from registering the transfer.3 This phrase means a written instrument 'such as will attract stamp duty under the relevant fiscal legislation'; it does not carry any further implication as to the form of the transfer.4 As a result of s 770(1), an oral transfer is ineffective even if the articles purport to make it effective. Furthermore, a clause in the articles purporting to effect an automatic transfer of shares in stipulated circumstances without any written instrument (eg from a deceased member to his widow as beneficial holder) is invalid.5

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