Post-completion of a share sale: How to dot the Is and cross the Ts

Shortly after completion

• Stamp duty: In most circumstances, transfer in ownership of the shares of the target company is not recognised until the relevant stock transfer forms (STFs) have been stamped by HMRC. In order for that to happen, the STFs executed by the seller(s) in favour of the buyer must be submitted to HMRC, and the relevant stamp duty on each STF (at 0.5% of the chargeable consideration) paid by the buyer to HMRC. Guidance on the payment of stamp duty can be found here.
• Filings at Companies House: Depending on the transaction taking place, there may be multiple filings that need to be made at Companies House in respect of the target company (e.g. notices of directors’, secretaries’, and auditors’ appointments and resignations, as well as changes to the Persons of Significant Control (PSC) register). Customarily, the time limit for filing is within 14 days of the change.
• Writing up statutory books: The books of the target company will need to be updated to reflect changes to the directors, directors’ residential addresses, secretaries, and PSCs. Note that the register of members should not normally be updated until the STFs have been stamped by HMRC.
• Transaction bundle: The buyer’s solicitors will normally prepare a bundle (also known as a ‘bible’ or ‘compendium’) of all the signed and dated transaction documents for circulation to the transaction parties for future reference.
• Security: The seller(s) should comply with any post-completion obligations to release the target company from any security it may be bound to with a lender.
• Post-completion adjustment of the purchase price: Calculating and paying any adjustments to the purchase price (e.g. where there are completion statements).

(Usually) within a few months of completion

• Writing up register of members: Once the STFs have been stamped by HMRC, update the register of members.
• Issue new share certificates: Once the buyer’s name has been written into the register of members, new share certificates will be issued in favour of the buyer with unique numbers.
• Cancel old share certificates: It is good practice to cancel the old share certificates and set out the date of that cancellation by way of audit trail.

(Usually) within a year of completion

• Deferred consideration: Calculating and paying deferred consideration (e.g. earn-outs), where there is an agreed mechanism for this in the share purchase agreement.
• Claims: Dealing with any indemnity or warranty claims during the relevant claim period, which may involve claims and disputes concerning third parties.

Comment

Our buyer clients are often keen to get their names written up in the register of members, get share certificates issued and crack on with running the business. It is however important to ensure that all post-completion formalities are complied with to ensure the client is the ‘official’ owner of the business and that the target and any subsidiaries are fully compliant with company law from the off.

Contact our Corporate & Commercial team today if you would like advice on share sales (including post-completion matters), we would be delighted to assist you.