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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3557
Experience:  Solicitors 2 years plus PQE
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Hi, We are selling our flat - which as part of the sale

Resolved Question:

Hi,
We are selling our flat - which as part of the sale is selling our share in the holding company set up that holds the freehold over the 3 flats in the building. I’ve now contacted both the other directors in the company that holds the freehold. They are unaware that any shares are in circulation/ever have been. I also spoke to the previous owner – who also confirmed he doesn’t have a share certificate.
So I don’t know how we proceed with this? The other directors are happy for me to put together some share certificates but I’m not sure on the legalities of it…
Obviously as part of the sale the buyers want need to be a part of the management company - but without share certificates I don't know how we bridge the gap
Submitted: 2 years ago.
Category: Law
Expert:  Alex J. replied 2 years ago.
Hi,
Thank you for your question and welcome.
My name is ***** ***** I will assist you.
I am a company law expert.
Firstly having share certificates is not essential - they are only absolute proof of your shareholding. If you do not have one you can always give the buyer of your flat an indemnity for the lost certificate (this is very standard).
Secondly most of these kinds of freehold holding companies are not traditional companies in the sense of having shares - often they are incorporated as companies "limited by guarantee". This is crucial because instead of having shares, you will not be shareholders, you will be "members" and each member will guarantee the company liabilities to the extent of £1. Normally your "membership" would revoke automatically on the sale of your flat. The advantage of being a company limited guarantee is that there is no formal process for transferring the memberships - as opposed to with shares you need a stock transfer form.
This leads me to two important questions:
1. Do you have the Memorandum and Articles - they will say whether this is a company limited or by guarantee?
2. In the articles does it say what criteria are required for someone to be a shareholder or member?
I look forward to hearing from you.
Kind regards
AJ
Customer: replied 2 years ago.

Hi AJ,

Thanks for the response.

The mems and arts state it is a company limited by share.

As far as I can see there aren't any criteria - the best I can see is that it is prohibited for members of the public to own shares....

Attachment: 2014-10-06_143057_manda.pdf

I've uploaded the m and a's FYI

Ben

Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
When you purchased the flat did you get a form CON40G (or stock transfer form) transferring one share into your name?
Kind regards
AJ
Customer: replied 2 years ago.

Hi,

Yes I believe we did, the solicitor who handled the case replied with:

I can see that we served notice of transfer on the management compnay but it seems we didnt receive a share certificate from the sellers lawyers on completion to transfer on to yourselves.I will urgently get on to this with the sellers lawyers.

Per annual returns etc, I am a share holder - but it is literally the lack of a share certificate that is the problem for us. This is all a condition of completing so I don't know the best method in satisfying what our buyers solicitor is looking for

Thanks

Ben

Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
What I suggest you do is:
1. Write some board minutes that state the following (they should just be headed with the company name number, location of the meeting, time and date - no real formality to them):
- The directors resolve to revoke all existing share certificates:
- Write that the directors have resolved to reissue share certificates to all existing shareholders in order update information and anomalies in the company records;
- Write that all the directors resolve to issue new share certificates to each shareholder - write each share holder out in name.
- Say that in the board minute that the directors delegate authority to you to draft the certificates.
Get all the directors to sign and date the board minute;
2.Draft a shareholder resolution that states "All the shareholders resolve to ratify and approve all the acts of the directors at the meeting dated [USE THE DATE ABOVE];
Note -Even though the directors and shareholders are essentially the same people important director resolutions and shareholder resolutions separate.
Put both these resolutions on the company records.
3. A share certificate has no set form - ask your solicitor for a template certificate for a private limited company with ordinary shares with a nominal value of £1.00 each - if he wont do it, just google a template and you should find one.
You then only need to:
- Up date the company books with the resolutions;
- Keep a record of the number of certificates that have been issued in the company books; and
- Two directors must sign each certificate.
When your share is then transferred to the buyer the other directors can cancel your certificate and issue a new one - the buyer will have to sort that out.
I look forward to hearing from you.
Kind regards
AJ
Customer: replied 2 years ago.

Thanks for that AJ, makes perfect sense.

I will get cracking with it - presumably the fact that both the other shareholders are overseas I put 'Not present'?

This is all 'in house' admin then? As in nothing needs to be sent/registered at companies house?

Thanks again

Ben

Expert:  Alex J. replied 2 years ago.
Hi<
Thank you.
Nothing will necessarily need to be filed at Companies House. You will just need to up date the register of members to show that share certificates replaced and old ones in existence.
All the shareholders should sign the resolution. If it can be a written resolution that would be ideal as the shareholder abroad can sign a separate copy.
Kind regards
AJ
Customer: replied 2 years ago.

Sorry, last one

Just clarify the written resolution bit? Obviously the director in Aus will need to also sign the certifcates of the other 2?

Thanks for your help - my solicitor has been so unhelpful, which is madness considering the share issue is something vital to completion!

Ben

Expert:  Alex J. replied 2 years ago.
Hi,
Thank you.
The written resolution is a written resolution of the shareholders - get all three flat owners to sign a copy of this in their capacity as shareholders - and place it with the company books. Just as a side point just write on it that they all acknowledge that the share certificates are lost and need replacing.
The share certificates (all three of them) can be signed by the same two directors (or a director and secretary if the company has one) - essentially you can sign your own share certificate.
Kind regards
AJ
Customer: replied 2 years ago.

Right - I will get cracking with that. I assumed I wasn't allowed to sign my own share certificate - so that's a bonus.

So just to confirm - the director in Australia - I can email the minutes/resolution over to her and she can sign and post back - eg it doesn't necessarily need to be the same piece of paper that I and the other director sign?

Thanks

Ben

Expert:  Alex J. replied 2 years ago.

Hi, Thank you. As long as you are a director and it is signed by at least two directors - you can sign your own share certificate. Correct the person in Australia needs to sign the resolution as a shareholder - yes they can sign a separate copy as long as the copies are identical and they are all kept together on the company books. What you are doing is correcting and making accurate the company administration. There is no prescribed form, just make sure what you have done has been approved as I have described is coherently and accurately recorded. Kind regards AJ

Alex J., Solicitor
Category: Law
Satisfied Customers: 3557
Experience: Solicitors 2 years plus PQE
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