Acquiring Company Membership: Transfer and Transmission of Shares

This set explores the legal mechanisms of acquiring company membership through the transfer and transmission of shares as defined by the Companies and Allied Matters Act (CAMA).

Transfer of Shares

The right of a person who has fully paid for their shares to transfer those shares to others, subject to the provisions of the articles of association.

Section 139 of the CAMA

The legal provision stating that shares are considered personal and transferable property.

Lien

The right a company holds over shares that have not been fully paid up, preventing the holder from transferring them.

Instrument of Transfer

The specific document used to execute the assignment or sale of shares from a holder to another person.

Section 175 of the CAMA

The legal section that mandates share transfers be done via an instrument of transfer.

Shareholder

A person who holds shares in a company but whose name has not yet been entered in the register of members.

Member

A person who holds shares and whose name has been formally entered into the register of members.

Section 176 of the CAMA

The legal provision stating that a transferee's name must be entered into the register of members for them to become a member.

Transferor

The current holder of shares who assigns or sells them to another person.

Transferee

The person with whom an agreement has been reached to receive shares via gift or consideration.

Section 152 of the CAMA

The legal section governing the substitution of the transferor's name with the transferee's name in the company records.

Endorsement

The act of signing the instrument of transfer by both the transferor and the transferee to authorize the share transfer.

Certificates Lodged

The notation made by a company secretary on an instrument of transfer when a transferor is selling only a part of their shares and the original certificate is left with the company.

Transmission of Shares

The automatic vesting of shares in a personal representative or survivor due to the death or bankruptcy of a shareholder, occurring by operation of law.

Section 179 of the CAMA

The legal section that regulates the transmission of shares.

Survivor

The person recognized by the company as having title to the interest in shares when a deceased member was a joint holder.

Personal Representative

The person recognized by the company as having title to the interest in shares when a deceased member was a sole holder.

Operation of Law

The principle that makes the transmission of shares automatic and immediate upon death or bankruptcy without requiring a transfer instrument.