A member’s entitlement to transfer any or all of his shares is subject to any restrictions in the company’s constitution. The transfer must be in writing and the form used must be one approved by the directors. The rules regarding share transfer can now be found at Section 94.
As before, the transferor is deemed to be the holder of the share until the name of the transferee is entered in the register of members.
A proper instrument of transfer must be delivered to the CLS, otherwise the transfer cannot be registered.
If a personal representative transfers the share of a deceased member, that transfer is as valid as if the personal representative were a member.
The only new provision is Section 94(8), which states that the section does not affect the application of the Stock Transfer Act 1963, unless the constitution of the CLS regulates the execution of instruments by any particular company (or other body corporate).
The well-known “absolute discretion” of directors to refuse to transfer shares – subject to the constitution of the company – remains the same (Section 95).
The directors only have two months – from the date when the transfer is lodged with the company – within which they can exercise this power. After the expiry of two months the power “shall cease to be exercisable”. This is a new section, but it simply puts the common law position into statute.
If directors refuse a transfer, they must notify the transferee within two months of the date when the transfer was lodged with the company.
Directors may suspend registration of shares for certain periods, as long as those periods do not exceed thirty days in each year.
Section 97 concerns the transmission of shares. It re-enacts the law which used to be found in Model Regulations 28 to 32 of Part I of Table A.
Section 97 will only apply if the company’s constitution does not provide otherwise.
The law in this area has not changed, but it is now brought together in one section, giving it clarity.
It should be noted that a person who becomes entitled to a share because of the death or bankruptcy of the shareholder is entitled to the same dividends and other advantages as he would be entitled to if he were a registered holder of the share. That entitlement to dividends is, however, only an entitlement to hold the dividends on trust. Nor is such a person entitled to exercise any rights in relation to meetings of the company (e.g. voting rights).
Further to this, the directors may serve a notice on the above person (i.e. transferee), requiring them to either be registered as holder of the share or to nominate a person to be the transferee. If ninety days passes after the service of this notice and nothing is done, the directors are entitled to withhold payment of all dividends in respect of that share (as well as all bonuses or other moneys).
The company may charge a fee on the registration of every probate, letters of administration, death certificate, power of attorney, etc. This fee may not exceed €10.
This section (Section 97) is new.
It provides that the Minister for Jobs, Enterprise and Innovation may prescribe procedures where the registration of shares in a company may be validly effected in two situations.
The first is in the case of the death of the sole member of a single-member company, where that member had been the only director of the company.
The second is in “other cases of difficulty in effecting such registration”.
Once any instrument of transfer of shares is certified by a company, this is taken as a representation by the company that it has had sight of documents which showed a prima facie title to the shares on the part of the transferor.
This rule is equally true where there is a debenture in question, rather than a share transfer.
The representation is made to “any person acting on the faith of the certification”.
It should be noted that the certification shall not be treated as a representation that the transferor has, in fact, any title to the shares.
If a person acts on the faith of a false certification, made negligently by a company, the company is under the same liability to him as if the certification had been made fraudulently.
See Section 98
Each shareholder is entitled to a share certificate within 2 months of the allotment or transfer of shares in the CLS. Each certificate is prima facie evidence of his title to the shares.
This, however, does not apply to a transfer which the CLS is entitled to refuse, and which it does not register.
If a company does not comply with the above, the person entitled to have the share certificates (or the debentures) delivered to him is entitled to apply to court. The order which may be sought is one directing the company and any of its officers to “make good the default”. The Court may specify the time period for this, and decide the matter of costs. It should also be noted that failure to comply leaves the company and any defaulting officer liable to a €5,000 fine.
Where share certificates are lost or damaged, the company may charge a fee for replacing them. The fee should not exceed €10 per certificate.
Where a share is held by more than one person, the company is not obliged to issue more than one certificate.
If a person believes that a share has been allotted invalidly, that person may apply to court to have the allotment declared valid. The same is true if it is thought that the company acquired or cancelled any of its shares invalidly.
The Court will make the order if it is just and equitable to do so.
Persons who may apply are: the company; any holder (or former holder) of such shares; any member (or former member) or creditor of the company; the liquidator of the company.
This offence used to be dealt with in Section 90 of the 1963 Act. It is now found in Section 101.
If any person falsely and deceitfully personates any owner of any share or interest in the company and tries to obtain the share, receives money due to the owner, or votes at a meeting as if he were the lawful owner, then that person is guilty of a Category 2 Offence. That means liability to a fine of up to €5,000 and imprisonment for 12 months, on summary conviction. Where the conviction is on indictment, the fine can be up to €50,000 and the prison sentence 5 years.