How to transfer shares of your Singapore company (The right way)

Sometimes, your businesses need to transfer shares for Singapore company. This can happen during capital calls, divestments, or capital increases. Enterprises will need to transfer shares.

Transferring shares is an important process. It requires a clear understanding of the law and procedures. That’s why GLA has put together this guide. It will help you understand:

• What share transfers mean under Singapore law
• When you need to transfer shares and what to watch out for
• The step-by-step process of transferring shares
• Tax implications and key considerations

With this knowledge—and GLA’s expert support—you can confidently handle share transfers without stress.

1. What is transfer of shares under Singapore law?

A transfer of shares happens when a shareholder transfers ownership of their shares to another person or entity.

This must follow the rules set by Singapore Company Law. Also, you can only transfer fully-paid shares.

Fully paid shares are shares that represent the true value of the shareholder's equity in the company. 

For example: If a company has 10,000 SGD in paid-up capital and 1000 shares issued, each fully-paid share will be worth 1 SGD. 

2. When do you need to transfer shares (4 cases)

There are four common cases where you need to transfer shares:

1. Raising capital – The company wants to bring in new investors.
2. Shareholder exit – A shareholder wants to sell their shares to existing shareholders.
3. Gifting shares – A shareholder gives shares to another person or third party.
4. Company restructuring, merger, separation.

No matter the reason, shareholders must follow Singapore’s share transfer regulations to ensure the process is legal and valid.

3. Standard legal process for transferring shares in a Singapore company

3.1. Documents you need to prepare

Before transferring shares, shareholders must have the following documents ready:

2.2. How can you do share transfer the right way? (With support from GLA

Once all the necessary documents are ready, you can begin the share transfer process for your Singapore. Ideally, with GLA's support, the entire process will become much easier and hassle-free, you will not miss a single task and avoid penalties.

3. Taxes and things to note when transferring shares

3.1. Stamp duty 

Stamp duty in Singapore applies to the transfer of real estate and shares. 

The tax rate is a percentage of the property value, varying by asset type.

For share transfers, we calculate share transfer based on <ul> <li>Net asset value</li> <liI>ssued share value</li> <li>Net asset value</li> <li>Market value (depending on company type and duration).</li> </ul> <p>The current tax rate is 0,2% of the share value.</p>

For example, a company under 18 months old transfers 1,000 shares at SGD 1 per share. The Stamp duty = SGD 2 (XNUMX% × XNUMX).

For precise calculations, you can always contact us or you can read more details from IRAS <a href="https://www.iras.gov.sg/digital-services/stamp-duty">Stamp Duty.</a>

3.2. Pre-Emptive Right

Preemptive rights are rights that allow existing shareholders to purchase shares before they are sold to external parties. 

Preemptive rights protect the company’s direction and prevents ownership from falling into competitors’ hands or individuals with conflicting interests.

Typically, there are 1 types of pre-emptive rights

1. Right of First Look
2. Right of First Refusal
3. Right of Last Refusal – The preferred party can accept or reject the final deal made between the seller and an outside buyer.

Right of First Look means that The preferred party can set terms, including price. If their offer is rejected, the seller cannot sell to an outsider on better terms. 

Right of First Refusal means that the preferred party can only accept or reject the seller’s proposed terms.

Right of Last Refusal means that the preferred party can accept or reject the final deal made between the seller and an outside buyer.

For the right of last refusal, the preferred party can accept or reject the terms negotiated and agreed upon between the seller and the outside party wanting to buy the shares.

4. How can we help your Singapore company do share transfer easily and effortlessly?

At Global Links Asia, we have over XNUMX years of experience helping SMEs and entrepreneurs expand into international markets. We understand what you need and provide comprehensive support for a smooth, hassle-free share transfer process.

• Ensure compliance with Singapore laws for an effective transfer.
• Choose the right company structure after capital transfer.
• Offer end-to-end services to optimize costs and operations.
• Offer you nominee director, secretary, andregiserted adress solutions.
• Manage your company financially with our one-stop cost-efficient tax accounting services for Singapore companies
• Open a bank account with a reputable bank in Singapore.
• Support with Consular legalization, trademark registration, payment gateway setup, and more.

5. FAQs about share transfer for Singapore companies

Highlights

• Transfer of shares in a Singapore company is the process by which a shareholder transfers ownership of shares to another shareholder.
• The company can transfer shares when it needs to raise capital, divest capital, donate shares or when the company restructures.
• Shareholders in the company have preemptive rights to purchase shares and must pay registration tax.
• Businesses should refer to the article on stock certificates for more details on the certificate.