Transferring Shares – Not as Simple as You Might Think

Some years ago, I acted for a Mr Waine one of the parties in the case of Pennington –v- Waine. The case became one of the leading authorities on share transfers and the formalities needed to complete a lawful transfer of share ownership.

The case is regularly cited in many subsequent judgments, the latest of which is the case of Nosnehpetsj Ltd v Watersheds Capital Partners Ltd & Anor [2020] EWHC 739. That case is itself relatively unremarkable but contains a succinct reminder of some of the hurdles and pitfalls that are so often forgotten when trying to transfer shares in a company. This includes:

• What is recorded in a company’s share register is prima facie evidence of title: section 127 Companies Act 2006
• Title to shares passes only on registration of the transfer: Re Fry [1946] Ch 312
• A transfer of shares cannot be registered unless a proper instrument of transfer has been delivered to the company: section 770 Companies Act 2006
• The mere fact that a company’s accounts or annual return record a particular shareholding is not of itself conclusive of that ownership

All is not always what it seems at first glance.

For more information on the topic please contact Paul Lunt directly.