In order to legally incorporate a company, it is mandatory to establish an authorized share capital, which is then distributed among the members based on their respective contributions to the company. These shares can take the form of either ordinary or preferred shares. Individuals listed as subscribers in the Articles of Association or shareholders have the option to transfer their shares, either in full or in part, to another individual or entity, or to surrender them back to the company.
The process of transferring shares to another party is known as a share transfer, which is typically carried out internally through a formal instrument of transfer. The transfer is considered complete once the name of the transferee is officially recorded in the company’s register of members, following an application submitted by the transferor. Electronic instruments of share transfer are also permissible. Both parties involved must execute the share transfer, either personally or through authorized representatives. Written share transfers are acceptable as long as they are approved by the company’s director.
On the other hand, share surrender involves returning shares to the company by a shareholder or corporate entity that initially subscribed for them. The shareholder must initiate the process by submitting a letter to the company indicating the amount of shares being surrendered. A special resolution is then prepared by the company to formalize the surrender, specifying the number of shares being returned and updating the company’s share structure accordingly. The application for share surrender is subsequently filed with the Corporate Affairs Commission (CAC).
Furthermore, it is essential for companies to maintain up-to-date annual returns with the CAC in order to effect any changes to their registration. This ensures compliance with regulatory requirements and facilitates smooth operations within the legal framework. Adherence to these procedures and regulations is crucial for the proper functioning and governance of a company.
In conclusion, the process of share transfer and surrender is a critical aspect of corporate governance, requiring meticulous attention to detail and adherence to legal protocols. By following these procedures diligently, companies can ensure transparency, accountability, and regulatory compliance in their operations.
