Non-Registration
We can help you to secure your share purchase or protect the interests of your company’s shareholders.
A potential hurdle that you may face when you want to sell (or buy) shares in a limited company is the prospect that a company’s Board of directors may refuse to 'register' (recognise or ratify) a transfer of shares.
The right to refuse to register transfers is actually quite common. In fact, the default model articles for companies contain exactly these kinds of restrictions.
The purpose of a power to refuse to register a transfer is to protect the interests of a company’s shareholders as a whole. Directors should exercise that power honestly and in good faith — not arbitrarily or unreasonably. Directors who wish to refuse to register a share transfer must tread carefully, as those who fall foul can face a personal liability.
We deliver the knowledge, action and insight you need when it matters most, helping to secure your share purchase or protect the interests of your company’s shareholders.
When can a transfer of shares be refused?
Under current legislation, where the directors refuse to register a transfer of shares, the 'buyer' is entitled to receive information from the board regarding the reasons for the directors' refusal to register the transaction.
In addition, the directors must also provide the ‘buyer’ with any further information on their decision to not register the transfer that the ‘buyer’ may reasonably request.
Where a transfer of shares has been made in accordance with a company's articles — and a duly completed and stamped stock transfer form is presented to the company for registration — the directors will only have the right to refuse to register the transfer if the company's articles allow for this.
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