Can I Transfer Shares To My Child?

Have you been wondering if you can transfer your shares to a child? It’s an interesting question. While you might think that our corporate lawyers may say no, this might not be the case. That said, just because you could, doesn’t mean you should. This is why you should speak to one of our corporate law specialists in Peterborough. We can talk through your situation with you and help you make the best decision for you, your shares and your child.

Not many people realise that there is actually no statutory restriction on shares being held by a minor in a company that is incorporated in England and Wales. However, there may be restrictions in the company’s articles of association. These could prevent a minor from holding shares. There could also be mention of this in a shareholder’s agreement.

In reality, it could be impractical for a child under 18 years of age to hold shares in a company. This is because they will have legal limits on their capacity to contract. When the minor turns 18 they will have the right to repudiate their shareholding in the company. This could even happen some time after they turn 18. In this case, the shares and liabilities in relation to the shares, would be returned to the previous shareholder.

It is also started that, under section 112 of the Companies Act 2006, an individual must agree to become a member of the company. However, how could this be done with a child? How could they provide sufficient agreement so it would comply with this legal requirement?

You may want to consider your child having an interest in your shares through beneficial ownership. This means that as a parent, you are the legal owner of the shares. In turn, as the adult, you would be able to exercise the various rights on behalf of your child. This would include things such as receiving dividends, voting, signing documents and more.

Managing shares in this way is far more common and a lot easier for all parties. It also means that shares can be transferred during the child’s minority, if needed, as the adult can sign the stock transfer form.

As we said, while it is possible to transfer shares to your child, sometimes it’s worth wondering if you should. That’s what our corporate solicitors in Peterborough can help you decide.