Companies Act 2006, section 771

Procedure on transfer being lodged

Part 21 Certification and transfer of securities

(1)When a transfer of shares in or debentures of a company has been lodged with the company, the company must either—

(a)register the transfer, or

(b)give the transferee notice of refusal to register the transfer, together with its reasons for the refusal,

as soon as practicable and in any event within two months after the date on which the transfer is lodged with it.

[F1006 (1A)The company may not register the transfer under subsection (1)(a) unless satisfied that it has the information that it is required to enter in its register of members in relation to the transferee.F1006]

(2)If the company refuses to register the transfer, it must provide the transferee with such further information about the reasons for the refusal as the transferee may reasonably request.

This does not include copies of minutes of meetings of directors.

F1007(2A). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)If a company fails to comply with this section, an offence is committed by—

(a)the company, and

(b)every officer of the company who is in default.

(4)A person guilty of an offence under this section is liable on summary conviction to a fine not exceeding level 3 on the standard scale and, for continued contravention, a daily default fine not exceeding one-tenth of level 3 on the standard scale.

(5)This section does not apply—

(a)in relation to a transfer of shares if the company has issued a share warrant in respect of the shares (see section 779);

(b)in relation to the transmission of shares or debentures by operation of law.

Read section 771 in the full Act → Definitions (7) Cases (5)

Definitions used in section 771

share

(1) In the Companies Acts “share”, in relation to a company, means share in the company's share capital.

Defined in s.540(1) · see it in the full Act
company

“company” means a company formed and registered under this Act, that is—

(a)

a company so formed and registered after the commencement of this Part, or

(b)

a company that immediately before the commencement of this Part—

(i)

was formed and registered under the Companies Act 1985 (c. 6) or the Companies (Northern Ireland) Order 1986 (S.I. 1986/1032 (N.I. 6)), or

(ii)

was an existing company for the purposes of that Act or that Order,

(which is to be treated on commencement as if formed and registered under this Act).

Defined in s.1(1) · see it in the full Act

(4) In this section and that Schedule “company” includes any body corporate.

Defined in s.1159(4) · see it in the full Act
the register

(2) The records relating to companies are referred to collectively in the Companies Acts as “the register”.

Defined in s.1080(2) · see it in the full Act
member

(2) In sub-paragraph (1) “member” has the same meaning as it has by virtue of section 7(1) of that Act .

Defined in Sch.2 Pt.1 · see it in the full Act
director

In the Companies Acts “director” includes any person occupying the position of director, by whatever name called.

Defined in s.250 · see it in the full Act
officer

“officer”, in relation to a body corporate, includes a director, manager or secretary;

Defined in s.1173(1) · see it in the full Act
daily default fine

(1) This section defines what is meant in the Companies Acts where it is provided that a person guilty of an offence is liable on summary conviction to a fine not exceeding a specified amount “and, for continued contravention, a daily default fine” not exceeding a specified amount.

Defined in s.1125(1) · see it in the full Act

Cases considering section 771 (5)

Dixon & Anor v Blindley Heath Investments Ltd & Anor

[2015] EWCA Civ 1023 · 9 October 2015Interprets

The court interpreted the provision as supporting the transferee’s entitlement to registration unless the directors resolve within a reasonable time to reject the transfer. Formal board approval is not a condition precedent to registration. (see paras [106]-[107]) The provision prescribes a period of no more than two months after lodging the transfer as the reasonable time within which the board may resolve to reject it. (see para [106])

Jeremy Sinclair Clarke & Anor v Yasmin Azim Lakha & Ors (Re Bramber Road Management Limited)

[2024] EWHC 51 (Ch) · 18 January 2024Interprets

Interprets the statutory timetable for refusal of registration. Time runs from when the share transfer is lodged, and the company must register it or give notice of refusal with reasons within two months. The power was lost here by 10 December 2019.

Moutreuil v Andreewitch & Anor

[2020] EWHC 2068 (Fam) · 29 July 2020

Because no proper instrument of transfer was executed, the purported registration was invalid. The court also held that an offence followed under section 771(3), subject to the statutory wording, and ordered rectification of the register (see paras. [89], [147]). The provision was relied on to identify the offence committed by the company and every officer in default when shares were registered without a proper instrument of transfer (see para. [89]).

What each judgment says about section 771 is in the case-law panel in the full Act.

Explanatory note

1092.Under section 183(5) of the 1985 Act, if a company refuses to register a transfer of shares (or debentures), it must, within two months of receipt of the transfer, send to the transferee notice of its refusal to register the transfer of shares. Such a refusal will not affect the transferee’s beneficial interest in a share, for example, he will still be entitled to any dividend declared on that share, and a return of capital on winding-up, but the transferee will not be able to exercise all of the rights of a member of the company, for example, he may not vote at meetings, until such time as the transfer is registered and his name is entered in the register of members.

1093.Section 771 is a new provision which amends the law on the registration of transfers. As recommended by the CLR, it requires the directors to either register a transfer of shares or debentures or provide the transferee with reasons for their refusal to register (see Final Report, paragraphs 7.44 and 7.45).

1094.In either case, this must be done as soon as practicable, but in any event within two months of the transfer being lodged with the company.

1095.Under subsection ( 2) , where the directors refuse to register the transfer of a share, the transferee is entitled to receive such information as he may reasonably require regarding the reasons for the directors’ refusal to register the transfer. Such information does not extend to minutes of meetings of the directors.

1096.Where a company fails to comply with this section, the company and every officer of the company who is in default commits an offence (see subsection ( 3) ).

1097.Subsection ( 5) makes it clear that this section does not apply to a transfer of shares if the company has issued a share warrant in respect of the shares under section 779 or in relation to a transmission of shares by operation of the law (for example, where a bankrupt member’s trustee in bankruptcy or a deceased member’s personal representative becomes entitled to shares).

All the explanatory notes for the Act

Amendments and notes

3 notes from legislation.gov.uk

Amendments

  1. F1006S. 771(1A) inserted (26.10.2023 but only so far as it confers a power to make regulations or relates to the exercise of the power, otherwise prosp.) by Economic Crime and Corporate Transparency Act 2023 (c. 56), ss. 46(11), 219(1)(2)(b) text inserted prospectively or the amendment may be in effect for limited purposes, see the commentary.
  2. F1007S. 771(2A) omitted (26.10.2023 for specified purposes, 26.1.2026 in so far as not already in force) by virtue of Economic Crime and Corporate Transparency Act 2023 (c. 56), s. 219(1)(2)(b), Sch. 1 para. 16; S.I. 2026/57, reg. 2

Modifications

  1. C1162S. 771 applied (with modifications) (1.10.2009) by The Limited Liability Partnerships (Application of Companies Act 2006) Regulations 2009 (S.I. 2009/1804), regs. 2, 25