In Kenya, the transfer of shares in a private limited company is governed by the Companies Act, 2015, and the company’s articles of association. Here are the general steps involved in the share transfer process:
Obtain the Share Transfer Form: The shareholder who intends to transfer their shares must obtain a share transfer form from the company. This form is usually available from the company secretary or can be downloaded online.
Complete the Share Transfer Form: The transferor (existing shareholder) and the transferee (new shareholder) must fill out the share transfer form with the relevant details, including the number and class of shares being transferred, the consideration for the transfer, and the date of transfer.
Stamping of Share Transfer Form: The share transfer form must be stamped by the Kenya Revenue Authority (KRA) within 30 days from the date of execution. The stamp duty payable is 1% of the market value of the shares being transferred. The stamp duty can be paid online .
Submit the Share Transfer Form: The completed and stamped share transfer form, along with the share certificate(s) representing the shares being transferred, must be submitted to the company. The company’s board of directors will then consider the transfer and make a decision on whether to approve it or not.
Approval by the Board of Directors: The board of directors of the company will review the share transfer application and decide whether to approve or reject it. They may have the authority to approve transfers or may need to seek shareholder approval.
Update Share Register: If the transfer is approved, the company will update its share register to reflect the change in ownership. The new shareholder’s name will be entered, and the transferor’s name will be removed from the register.
Issue new Share Certificate: Once the share transfer is completed, the company will issue a new share certificate to the transferee, indicating their ownership of the transferred shares. The transferee becomes the legal owner of the shares upon receiving the new share certificate.
Update Necessary Records: The company must update its records, including its register of members, and notify the relevant authorities such as the Registrar of Companies about the share transfer. This can be done online via the e citizen platform.
It’s important to note that the above steps provide a general overview of the share transfer process in a private limited company in Kenya. The company’s articles of association may contain specific provisions that need to be followed, and it’s advisable to consult with a professional, such as a lawyer or company secretary, to ensure compliance with the applicable laws and regulations.
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