By Legal Futures Associate Share Data [1]
The sale or transfer of securities process is time-consuming, involving a lot of paperwork with different requirements from share registrars. The process becomes even more complex regarding overseas shares and funds.
Each country has contrasting rules, processes and established ways when handling the transfer or sale of securities. Navigating these varying rules slows down the work.
Many investors move between countries, or the shares they hold in certain companies are taken over by different firms abroad. Most of these shareholdings are small, making it challenging to sell them.
In the case of deceased estates, personal representatives are often required to sell shareholdings quickly and efficiently to cover debts and taxes owed by the estate before distributing the deceased assets to the beneficiaries. A quick sale and transfer service saves time and money during the estate administration process.
How are the shares held?
Before selling shares, it is critical to understand how the shares are held. Depending on the region and how the shareholdings were acquired, it is possible to store the shares in a:
- nominee account with a stockbroker,
- dematerialised (electronic) form, certificated form,
- Custodian account with a bank or in a corporate-sponsored nominee.
Most shares are sold through a stockbroker.
The UK share sales
UK shares can either be held in a paper Share Certificate or as a corporate-sponsored nominee (CSN). In this form, the shares are held electronically with the company’s Registrar (an institution with records of all company shareholders).
When selling a certificated shareholding, a stockbroker would require the original valid share certificate(s) and a signed CREST Transfer Form per holding. The broker can then deposit the shares into their account in CREST, the Recognised Clearing House (RCH) that facilitates the trading and settlement of UK and Irish shares.
To sell a corporate-sponsored nominee (CSN) shareholding, a stockbroker would require the appropriate CSN Withdrawal Form (stock/registrar specific) and a cheque for the Registrar’s fee, which varies between £10 to £25. The broker will then submit the form and cheque to the Registrar, who will agree to transfer the shares to the broker’s CREST account.
Capital Gains Tax and disposal of shares in the UK
CGT is payable on gains made after the disposal of assets located in the UK or overseas and includes shares. Therefore, one may be liable to Capital Gains Tax on any profits made during the sale of shares. To calculate Capital gains, the acquisition cost of an asset, together with any costs associated with the acquisition or disposal, such as stamp duty or legal fees, is deducted from the sale proceeds.
Every individual has an annual tax-free allowance where if one does not exceed the CGT annual exempt amount, no tax is payable. CGT is therefore charged on the amount of the excess. For the 2020 to 2021 tax year, the annual exempt amount is £12,300.
International share sales
Foreign shares can equally be stored in a paper Share Certificate or as a corporate-sponsored nominee (CSN). However, the processes involved and the requirements for each vary from country to country. Below are the most common examples:
North American Shares
Most US and Canadian shares are held electronically with the company’s Transfer Agent (an overseas Registrar), more commonly known as Direct Registration Shares (DRS) or Dividend Re-Investment Plan (DRIP) shares. Accordingly, the stockbroker would require a DRS or DRIP Statement (showing the name and registered address on the holding, plus the balance of shares) dated within the last six months to withdraw shares from the Transfer Agent and deposit them into the brokers’ account held within the local RCH.
Other shareholdings held electronically outside North America will have different requirements, which the broker can confirm on a stock-by-stock basis.
Depending on the country in which the transfer Agent is based, shares held in certificated form will require a specific transfer form. For example, a stockbroker would need this signed form and the original valid share certificate(s). There is a £200 fee chargeable for this service due to the extent of the administration involved and overseas courier charges.
Medallion Signature Guarantee Stamp
When dealing with North American assets, Investors may need a Medallion Signature Guarantee to transfer the ownership of shares. Unfortunately, very few organisations outside of North America are authorised to issue Medallion Signature Guarantees, which makes acquiring one potentially tricky. To find out more about this requirement, read our guide on Medallion Signature Guarantees [2].
How Share Data can help
Share Data has a long-standing experience selling and transferring shares overseas and in the UK. Our dedicated team will:
- Submit the completed, signed forms to the transfer agents and brokers,
- Arrange for sale after ownership has been transferred,
- Hold shares in a broker account in the UK.
Take a look at our pricing list [3] for verification & valuation of holdings and the sale and transfer services.