Key things to be aware of:
Only B shares transfers are typically permitted. Transfers of A shares are more restricted (see Articles of Association for details).
Only transfers of an investor’s full shareholding are ordinarily permitted. Partial transfers require Freetrade Limited Board approval and will not typically be permitted (see Articles of Association for details).
Transfers are a bilateral agreement between the buyer and the seller. Freetrade does not intermediate transfers; does not act for the buyer or seller (even where one party is a Director); and does not advise on transfers.
Freetrade does not take any responsibility with respect to payments for shares. The transaction is between the buyer and the seller.
The buyer and seller are responsible for any tax implications of the transfer. They may wish to seek their own tax advice - e.g. concerning EIS benefit, which the seller may well lose upon transfer, and will not transfer to the buyer. Freetrade does not provide tax advice, and any guidance Freetrade provides should not be treated or relied upon as tax advice.
Transfers will ordinarily attract stamp duty, unless an exemption applies. It is the buyer’s responsibility to advise HMRC of the transfer and to pay any required stamp duty. Transfers may be invalidated if this is not completed.
The guide provided for completing the J30 is only a guide, and the buyer and seller are responsible for ensuring it is filled out correctly for the transfer.
Any transfer must be accepted by Freetrade in order to be actioned and effective. This includes investor due diligence, which must be completed satisfactorily before any transfer can go ahead. Freetrade Limited reserves the right to prevent transfers on these grounds.
Suggested transfer process:
1. Once a seller has agreed to a transaction, in principle, with a buyer: they should email the Company Secretary, with the buyer cc’d, confirming the terms of the transaction (at a minimum, the quantity and price), and whether the buyer is an existing shareholder.
2. No further action should be taken until the Company Secretary has confirmed any due diligence requirements. If the buyer is a new shareholder, they will likely need to submit 1 proof of ID and 1 proof of address (separate documents). Please wait for confirmation from the Company Secretary that checks are complete before proceeding with the transaction.
3. Once checks are confirmed as complete, buyer and seller will agree terms and method of payment - it is up to buyer and seller whether to use bank transfer, escrow service or other method.
4. Once payment is received by the seller, the seller should confirm back on email to the buyer and Company Secretary and provide evidence (e.g. screenshot of bank statement) as such
5. The buyer should now confirm to the seller their full name (including title e.g. Mr, Mrs etc) and registered postal address, in order for the seller to complete the J30.
6. The seller now completes the J30 form. A suggested guide is provided for completing the J30.
7. The seller shares a soft copy with the buyer and the Company Secretary. The Company Secretary will confirm whether the transfer can proceed to the next stage.
8. The seller sends by post the original completed J30 to the buyer.
9. If stamp duty is payable, the buyer will submit the J30 to HMRC, together with payment for the stamp duty. See here for more details https://www.gov.uk/guidance/stamp-duty-on-shares
10. HMRC will send to the buyer the stamped J30. Upon receipt, the buyer must send a soft copy of the stamped J30 to the Company Secretary.
11. At this point, the transfer is complete and the share certificate can be issued to the buyer. If no stamp duty is payable, this can be done after step 8.