Share Transfer, Share Allotment & Share Surrender

There are various forms by which the shares of a company can be distributed to members or other interested parties, such as investors. Though they achieve the same purpose, they are quite different procedures.

SHARE SURRENDER: Share surrender occurs where a shareholder voluntarily returns or relinquishes the shares allotted to him/her by the Company back to the company. The shares are surrendered back to the Company, where the Shareholder desires not to hold the shares of the company anymore. He/She ceases to be liable as a contributor to the liabilities of the company except for past liabilities. The articles of a company must permit the company to accept a surrender of shares. To complete this process, a share surrrender form along with a signed resolution is to be filed with the Corporate Affairs Commission (CAC). The Shareholder must also write a Letter of Surrender in favour of the Company.

SHARE TRANSFER: This occurs when a shareholder gives out his/her interest in a company by way of transfer. This could either be by way of sale (where the articles of association/shareholder agreement of a company authorise such), transmission (which is an operation of law, in cases where a shareholder dies or is bankrupt) or by gift. This is done through an instrument of transfer usually executed by both the transferor and the transferee. A share transfer is complete where a share certificate is issued to the new shareholder by the company and his/her name included in the register of members. Under the CAMA 2020, share transfers do not need to be filed with the CAC but must be reflected in the company’s next filing for Annual Returns.

SHARE ALLOTMENT: This occurs either at incorporation or where the company issues or creates new shares, which can either be issued to new or existing members of the company or new investors. The shares can be allotted in exchange for cash or other consideration or as bonus shares to existing members. A private company would file a return on allotment of Shares with the CAC to register the allotment. Share allotment is often times a company’s technique to expanding its business partners or to ensure liquidity

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