From our understanding of the question posed, the question is about purchasing shares in a Singapore company. We have broken down the answer into two sections. We will discuss purchasing all the shares of a Singapore company as well as purchasing part of the total shares of a Singapore company.
Purchasing all the shares of a Singapore company
This will mean that the buyer will be purchasing all the shares from the current shareholders. These are the documents which need to be prepared.
1) The Share Purchase Agreement or Share Transfer Form
We will usually get clients to draft a comprehensive share purchase agreement as this entails handing over all the shares and thus full ownership of the company. If necessary, a lawyer may be engaged to prepare a contract for the sale of the shares. The contract should clearly state the sale price and any other special terms which come together with the sale of these shares.
2) A Shareholders’ Resolution
This will be done at a general meeting. The shareholders will consent to sell their shares in a resolution.
3) A Board Resolution
The directors will need to pass a resolution approving the share transfer. The model constitution provides that share transfers can only take place with approval from the board. The directors will have the right to veto the share transfer if the transfer is detrimental to the company or if they have reason to believe that the transfer is fraudulent.
4) Share Certificates
The share certificates must be handed over to the purchaser. The company secretary will usually cancel the old share certificates and will issue new share certificates to the new shareholders bearing their name and particulars.
5) Stamp Certificate from the Inland Revenue Authority of Singapore (IRAS)
Stamp duty has to be paid on the purchase price of the shares. The stamp duty is 0.2 per cent of the purchase or the value of the shares.
Purchasing part of the total shares of a Singapore company
The documents required for the purchase of part of the total shares are the same. However, in the event that the share purchase is not significant, i.e. after the purchaser has completed the purchase, his or her total percentage of share ownership is 25 per cent or less, the purchaser may choose to have a simple share transfer form rather than have a share transfer agreement drafted.
Do note that the sale and purchase of shares in a Singapore company is a significant transaction. The shareholders are the owners of the company and they can decide on important matters like the appointment of directors. Approval for directors’ remuneration is also sought from the shareholders. Thus due to their ownership of the company, they can influence the directors and instruct them to act in a certain manner.
When in doubt, seek legal advice or consult an experienced ACRA Filing Agent.
The editorial team at Singapore Secretary Services
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