A share transfer is when ownership of one or more shares passes from one party to another. Common forms of share transfer are sale, gift and inheritance. But for a share transfer to be carried out correctly, that is, to be legally valid, it must follow a set process.
How a share transfer works: step by step
Below we describe the steps of a general share transfer process.
- Make sure the company's articles of association contain no obstacles to the transfer. Examples of obstacles to a transfer are a right of first refusal (förköpsrätt), a consent requirement and a post-transfer pre-emption clause (hembudsförbehåll).
- Draw up a share transfer agreement setting out the type of share, the price per share, the number of shares, the transfer date and any other material terms.
- The transaction is completed when the buyer pays the seller, after which the buyer receives the shares she has paid for.
- The change in the company's ownership is then recorded in the company's share register. The company is responsible for this step, not the buyer.
- Finally, make sure the transfer is taxed correctly; for example, the seller may have to pay capital gains tax. At the time of writing (2024) there is no inheritance or gift tax in Sweden.
NOTE: If the share transfer is not an inheritance or a gift but a sale, due diligence is normally one of the steps. Due diligence means that the buyer carefully checks whether the company has large or hidden debts or other kinds of problems.
Which companies carry out share transfers?
Companies that carry out share transfers are:
- Private companies such as family businesses and other companies with unlisted shares, such as Klarna.
- Public companies whose shares are bought and sold on the stock exchange, that is, listed companies such as Tesla and Ericsson.
Below we answer frequently asked questions about share transfers.
What is a share transfer agreement?
A share transfer agreement is a legal document that sets out the terms of the transfer, such as the number of shares, the price, the transfer date and the type of shares.
How does a right of first refusal affect a share transfer?
A right of first refusal affects a share transfer in that existing shareholders must be offered the shares before outside parties receive the offer. If the right of first refusal is ignored in a transfer, the transaction can be declared invalid.
What taxes have to be paid on a share transfer?
A common tax on a sale of shares is the capital gains tax paid by the seller, but there is currently (2024) no tax on a transfer by inheritance or gift in Sweden.
Can shares be transferred to anyone?
Yes, if it is a listed company, for example one on the Stockholm Stock Exchange, but no if it is a private company. Private companies can have special provisions in their articles of association governing how shares may be transferred.
