PART 3 Conveyance or Transfer on sale of any Stock or Marketable Securities
Reference to the SDCA in this manual is to the Stamp Duties Consolidation Act 1999. Introduction A sale of shares in an Irish registered company for a cash consideration is chargeable to stamp duty under the “Conveyance or Transfer on sale of any stocks or marketable securities” head of charge and is liable to duty at the rate of 1% of the consideration. Changes introduced by Finance (No. 2) Act 2008 Section 87 of the Finance (No. 2) Act 2008 also amends Schedule 1 of the SDCA to provide for an exemption from the 1% stamp duty on stock transfer forms where the consideration paid is €1,000 or less. To avail of the exemption (from the maximum stamp duty charge of €10) the instrument must be certified as follows: “It is hereby certified that the transaction effected by this instrument does not form part of a larger transaction or of a series of transactions in respect of which the amount or value, or the aggregate amount or value, of the consideration which is attributable to stocks or marketable securities exceeds €1,000.” The certificate should be inserted on the reverse side of the stock transfer form and signed by the transferee. Where the stock transfer form is duly certified, the form will not need to be presented to Revenue for stamping and should be forwarded directly the company registrar (i.e. the person who maintains the share register of the company and not the Registrar of Companies). A similar treatment will apply in relation to an instrument which operates as a gift of stocks or marketable securities with the substitution of the value of the stocks or marketable securities for the amount or value of the consideration for the sale. Where the consideration for a particular transfer of stocks or marketable securities is €1,000 or less but the transfer does form part of a larger transaction or of a series of
transactions in respect of which the amount or value, or the aggregate amount or value, of the consideration which is attributable to stocks or marketable securities exceeds €1,000, the instrument will be chargeable to ad valorem stamp duty at 1% and must be submitted to Revenue for stamping. The same applies to a gift made in similar circumstances with the substitution of the value of the stocks or marketable securities for the amount or value of the consideration for the sale.
The change does not affect electronic transfers of stocks or marketable securities. Accordingly, ad valorem stamp duty at 1% will continue to be chargeable on transfers effected in CREST regardless of the amount or value of the consideration for the sale concerned. The change applies to such transfers executed on or after 24 December 2008 (date of enactment of Finance (No 2) Act 2008).
CREST CREST is the electronic system, which settles transfers of shares that are dealt with on the Irish and UK Stock Exchanges. Under the CREST system, an instrument is not produced – the shares are transferred electronically, i.e. CREST is a paperless system of transferring shares. Legislation was introduced under the 1996 Finance Act, which provided for the payment of stamp duty on electronic messages, which effect the transfer of shares. Please see the Crest manual for further information on the operation of Crest.
Stamp Duty Exemptions/Reliefs for certain transfers of shares In certain circumstances transfers of shares can be relieved from stamp duty. The most common reliefs relate to: • Foreign Shares - transfers of shares in companies registered outside the State. For example, a transfer of shares in British Gas plc. is not chargeable to Irish stamp
duty - even if the stock transfer form is executed in Ireland. (The exemption does not apply if the transfer of the foreign shares “relates” to Irish immovable property or to Irish shares – see section 88 of the SDCA.) • Intra-Group Transactions – transfers of shares between companies which are closely associated within a corporate group structure – see section 79 of the SDCA. • Reconstructions/Amalgamations – transfers of shares in the course of certain corporate reorganisation transactions - see section 80 of the SDCA.
Stamp Duty on transfers of Irish securities
Intermediary relief Section 75 of the SDCA This section provides for a relief from stamp duty for recognised intermediaries and member firms involved in the business of dealing in securities. This exemption does not apply to “excluded business”, these are: (a) the making or managing of investments, (b) providing services to persons connected with the person carrying on the business, (c) insurance business or assurance business (d) managing, administering or acting as trustee of a pension scheme, Relief for clearing houses Section 75A of the SDCA This section provides for a relief from stamp duty for recognised clearing houses.
Buy-backs of Shares In certain circumstances companies can opt to buy-back some of their own shares from shareholders. The stamp duty treatment is dependent on the manner in which the buyback is effected. There are two ways of effecting such a transaction - but only one of them attracts stamp duty.
The shares can be bought-back by means of a standard stock transfer form. In this case duty is assessable in the normal way.
The shares can be bought back on foot of a contract or share purchase agreement. If the shareholder and the company enter into an agreement and the shareholder simply hands over the share certificates to the company there is no need for a stock transfer form and no duty can be charged. The share purchase agreement is not chargeable to duty because it falls outside the scope of section 31 of the SDCA (stamp duty on contracts).
Form 52 Section 58 of the Companies Act 1963 provides that a company must lodge a copy of the underlying contract or, in the absence of a written contract, a stamped Form 52 with the Companies Registration Office when it issues or allots shares for a non-cash consideration. Details of the consideration paid for the issued shares are set out in the Form 52, which is chargeable to stamp duty in the same manner as if it were a written contract. A charge to stamp duty can arise under section 31 of the SDCA unless the assets comprising the consideration for the allotment are specifically excluded from a charge to duty under the provisions of section 31.
The Share/Stock Transfer Form The standard form commonly used is the one set out in the First Schedule of the Stock Transfer Act 1963. The type of form used by a company may be determined in its Articles of Association. Inadequately stamped forms Section 129 of the SDCA Every company is obliged by law to keep a Share Register, which lists the names of all shareholders and the numbers and classes of the shares held. The Share Register is
maintained by the Company Secretary. The Company Secretary may not register a change of shareholder on foot of an inadequately stamped share/stock transfer form. Under section 129 of the SDCA, the company secretary may be fined €630 for each such registration. Because of this legal imposition on the company secretary, registration can be refused and the new shareholder may be instructed to have the share/stock transfer form adjudicated.