Stock transfers made easy: when ownership changes hands

Stock transfers are of the most consequential ‘small’ actions a company can take. When shares change hands, ownership, control, tax treatment and investor rights can shift with them. 

Handle it properly and the change is clean, compliant, and easy to evidence in future fundraising or due diligence. Get it wrong and the consequences usually surface later, when investors or buyers start asking for proof.

This is a step-by-step guide to stock transfers. You’ll learn what a stock transfer is, why it happens, how to run one in practice, what to do about stamp duty, and what needs updating afterwards (including implications for Companies House-style records, even when there isn’t a specific Companies House filing for the transfer itself). 

By the end, you should be able to run the process with confidence and avoid the common mistakes that spook investors.

What is a stock transfer?

A stock transfer is the transfer of existing shares from one shareholder (the transferor) to another (the transferee). The total number of shares in issue stays the same, so there’s no dilution. That’s the headline difference from issuing new shares.

A stock transfer is not the same thing as issuing shares, granting options, or making awards under a share plan. 

It also isn’t the same as public-market settlement systems such as CREST. In private companies, the transfer is typically documented using a stock transfer form (often abbreviated to STF), backed by any approvals required under your articles and shareholder agreements.

Precision matters because a transfer is a change to the ownership record. Once it happens, it affects the cap table, voting rights, dividend entitlements and investor protections. Those are not paperwork consequences. They are governance consequences.

Why stock transfers happen

In practice, stock transfers happen for a small number of predictable reasons. Founders may rebalance ownership between themselves, bring in a strategic individual investor, or allow an early shareholder to sell a portion of their holding. 

Early employees and angel investors may want liquidity as the company matures. Some transfers are non-commercial, such as gifts between family members or transfers connected to estate planning.

For a high-growth company, stock transfers often show up at exactly the moments where scrutiny increases: before a funding round, during due diligence, or ahead of an exit. That’s why this process is worth getting right even when the transaction itself feels straightforward.

Stock transfers don’t usually create risk; bad records and missing approvals do.

1. Check whether the transfer is allowed

Before you touch forms or numbers, check the rules that govern your shares. For most advanced companies, the main constraints sit in:

• The articles of association (transfer restrictions, board approval, permitted transferees)
• Any shareholders’ agreement (consent rights, pre-emption on transfers, investor protections)
• Any share class rights (drag/tag provisions, restrictions on particular classes)

This is where founders often get caught out. It’s not unusual for a transfer to be agreed commercially, only for investors to have consent rights that need to be satisfied. 

If you bypass those rights, you can end up with a dispute or a transfer that is challengeable later.

If you’re unsure whether the transfer triggers permissions, treat that as a red flag and seek professional advice.

2. Confirm the facts that will go on the stock transfer form

A stock transfer form records who is transferring what to whom, and on what terms. 

You’ll typically need:

• The company name
• Share class and number of shares being transferred
• Transferor and transferee names and addresses
• Consideration (what is being paid), if anything

HMRC’s guidance on stamp duty and stock transfer forms is worth treating as your baseline for how HMRC expects the process to work.

A quick point that matters for investors: consideration isn’t the same as what you think the shares are worth. It’s the amount paid (or otherwise given) for the shares as part of the transfer. That number drives stamp duty.

3. Work out stamp duty (and don’t guess)

Stamp duty is where many companies lose time. The rule is simple, but it has edges.

From HMRC guidance:

• Stamp duty is payable when chargeable consideration exceeds £1,000
• The rate is 0.5% of the chargeable consideration
• The amount is rounded up to the nearest £5
• The buyer (transferee) is generally responsible for paying

There are also exemptions, including transfers between spouses or civil partners, transfers under a will or intestacy, and transfers to charities.

Stamp duty is driven by consideration and exemptions, not by your opinion of value. Treat it as a compliance decision, not a judgement call.

4.Execute the paperwork and approvals cleanly

At this stage, you’re translating the agreed deal into a compliant paper trail. The exact documents vary, but commonly include:

• Stock transfer form (signed)
• Board or shareholder resolutions, if required by your governance documents
• A share purchase agreement (SPA) for sale transfers, particularly where warranties or restrictions matter

If stamp duty is payable, HMRC’s process includes submission of the signed form and evidence of payment. Keep the confirmation with your company records as investors may ask to see it later.

This is also the point where discipline matters most. A missing signature or mis-stated share class is the kind of small error that becomes an expensive clean-up in due diligence.

5. Update the records that prove ownership

Here’s the part people misunderstand: Companies House is not your live cap table. A stock transfer doesn’t typically require a Companies House filing in itself, but it does require your company’s statutory records to be accurate.

After the transfer, you should ensure your internal records reflect the new reality, including:

• Register of members (shareholders)
• Any share certificate updates, if your process uses them
• PSC register updates if the transfer changes a person’s PSC status (Companies House guidance on PSC) 

As per General Companies House guidance around shareholders and company formation, the important point for experienced readers is this: you’re managing a chain of evidence. If you can’t prove the change cleanly, it’s as if it didn’t happen.

What this means for existing investors

Every transfer changes the ownership map, and that can affect investor dynamics even when no new shares are issued. 

A transfer may alter voting thresholds, change who crosses consent levels, or introduce a new shareholder with different expectations. In some companies, transfers can also affect information rights or majority definitions in shareholder agreements.

From an investor’s point of view, the biggest risk isn’t the transfer itself. It’s uncertainty. 

Unclear records, missing approvals, or inconsistent documentation are all signals that governance is loose. In high-intent fundraising contexts, it raises questions you shouldn’t have to answer.

Common mistakes that create avoidable pain

Most problems come from predictably avoidable errors, such as skipping governance checks, completing the wrong stamp duty certificate, or failing to update the register of members. 

The irony is that these mistakes often sit unnoticed for months or years, then surface at the worst possible time, such as a funding round or acquisition.

How Vestd helps keep transfers clean

The practical challenge with stock transfers is not the concept. It’s execution and record-keeping. 

Manually managed transfers often fail because documents live in email chains, cap tables drift, and key evidence gets lost as teams change.

A platform approach helps because it keeps the transfer workflow, documents, signatures and cap table updates connected. That’s especially useful if you have historic transfers completed off-platform and want a single source of truth going forward.

Summary

Stock transfers are a normal part of growing a company, but they deserve more respect than they get. Treat them as an ownership change with legal and investor consequences, not a form-filling exercise.

Your next step is simple: if you expect to do any transfer in the next 6–12 months, review your transfer restrictions now, and make sure you have a repeatable workflow for permissions, stamp duty checks, documentation and record updates. That’s how you keep ownership changes fast, clean and investor-ready.

On Vestd, you can manage both new stock transfers and previous transfers completed off-platform. Book a call with Vestd to find out more.