If you’re a current shareholder in a company, one of the main things you need to prioritise is to plan how you want your shares to be managed when you pass away. There are different things to consider here, so it’s important to plan beforehand so you don’t get overwhelmed.
Not sure what the process entails? We’ll simplify it for you in this quick guide on what to do when a shareholder passes away in Singapore.
Before anything else, the most important thing you need to know is that there are two ways in which you can legally transfer your shares to another person: share transmission and share transfer.
When talking about share transfer, you’re basically transferring your shares to another person. This is a voluntary process, which means that you can do it anytime.
You need to execute an Instrument of Transfer with the transferee or the person you wish to transfer the shares to. This document is a record stating that you and the transferee have reached an agreement in transferring the shares.
It can be useful to consult with a corporate lawyer to help you with the process. Otherwise, you can gather and submit the following documents below:
- Instrument of Transfer
- Notice of Transfer
- Board Resolution
- Share Certificate (the document which proves ownership of the shares)
- Share Transfer Form
- Inland Revenue Authority of Singapore (IRAS) stamp duty acknowledgement
On that last note, keep in mind that you have to pay for stamp duty as well, which is currently at 0.2% of the purchase price or the value of the shares. You can get some advice from a tax advisor regarding this matter.
It’s also important to refer to your company’s constitution to see a list of potential recipients for the shares.
On the other hand, a share transmission is the act of transferring the shares of a dead shareholder to another person. Share transmission is applicable to both private and public companies in Singapore.
Unlike share transfer, there are no requirements or stamp duties needed in this process. It’s only triggered once the shareholder has passed away.
Share transmissions are still subject to the rules set by the company’s constitution. Just like share transfers, this means that potential recipients will be based on company rules.
For instance, if you’re a joint shareholder, only the surviving shareholders in the company would be eligible to receive your shares.
On the other hand, sole shareholders may have their personal representatives legally distribute their shares to rightful beneficiaries. Personal representatives may include probate lawyers or executors of the deceased’s will.
If the shareholder passed away without a will, a relative can serve as an administrator. An administrator will be responsible for the management of the deceased’s assets.