I sold my shares back to the company upon resignation of my position as its director/ company secretary. The share transfer form was completed and signed by myself and the managing director, in the presence of the company accountant and sent to the HMRC at the end of October this year.
The form has now been returned to the company but they are yet to pay me the agreed value.
They say this is because of a lack of availability of funds and have suggested the shares be reassigned and re-evaluated.
Can this be done after the transfer form has already been submitted?
Apologies for the slow response, I was away at the time and since coming back I’ve been experiencing a busy December!
For share buy backs by a company a stock transfer form is not usually used or required as the shares rather than being purchased (and transferred) are being cancelled by the company. However, an executed stock transfer form could still be used as evidence that the buyback has completed. Depending on what’s contained in a company’s constitution, share buybacks normally require an ordinary resoultion (majority) of the shareholders to be approved, while a share buyback agreement is the main document that should govern the transaction.
Particularly if the consideration amount is included in the stock transfer form you’ve used (and this is backed up by emails confirming your agreement for the monies to be paid on exchange) then this can be seen as proof that the deal has exchanged and completed, with the consideration amount not being paid constituting a breach of contract, as well as a debt outstanding that has been accruing interest at the statutory interest rate.
As with any share deal, a stock transfer form should always be accompanied by an agreement outlining the specific terms of the sale (or buyback) and settlement between the parties. Such agreement will also cover the mechanics of exchange and completion and payment of monies owed. This should make the terms of the transaction unequivocal and minimise any ‘wriggle room’. Using solicitors, including client accounts to hold completion monies in escrow to be released on execution (or whenever else agreed), will also ensure that such non-payment doesn’t occur.