In May 2022, a Cial employee in Chile woke up with a salary 286 times his actual salary. Well, he promised to refund the company after they told him what happened, but he didn’t; instead, he sent a resignation letter and disappeared. Also, earlier this year, Citigroup mistakenly credited a client $81 trillion instead of $280, due to a data entry error. However, an employee spotted the error and was able to stop it before it went through.

Making a mistake on any investment or financial form is a big problem, and while you might be able to recover your funds like Citigroup, the best approach is to ensure that it doesn’t happen in the first place. Using a stock transfer form and ensuring people properly fill it out ensures the transaction is valid, legally binding, and goes to the right person.

In this guide, we’ll cover how to use stock transfer forms and common errors to avoid.

What Is the Purpose of a Stock Transfer Form?

A stock transfer form is your proof that shares are moving from one party (the transferor) to another (the transferee). So, a stock transfer happens when you sell or gift your shares to another person or entity.

When to Use the Form

• Selling shares to an investor or third party
• Gifting stock to family members
• Transferring shares as part of an estate plan
• Company-initiated transactions (buybacks, employee stock plans)

Key Information to Include in Your Stock Transfer Form:

Stock transfer forms vary from one institution to another, but they all share some key components that must be included. Here’s what you need to include in your form to ensure you collect all the information you need to make your transfer seamless:

• Parties Involved: You need to collect the full legal names and addresses of both the transferor and the transferee. You also need their signatures and witnesses (depending on jurisdiction).

• Company Details: Collect the company’s registered name and registration number for stock transfer for B2B transfers. People can also want to transfer from a business to an individual or from an individual to a business. 
• Share Information: This includes the class and quantity of shares being transferred. You should also collect the share certificate number(s) to verify the ownership of the shares.

• Consideration (Payment or Gift): Record the sales price per share or the overall share price if the individual share price isn’t available. For cases where no payment is made, collect a clear declaration that the transfer is a gift.

• Stamp Duty (Where Applicable): Check local regulations to know if you’re to collect tax documentation or fees 

P.S.: One of the most common mistakes is omitting the share certificate number, and without it, the transfer may be rejected or delayed.

Understanding the Roles: Transferor vs. Transferee

Every transaction requires a sender and receiver, and so does the stock transfer process. It’s either you’re the sender or the receiver:

• Transferor: The person or company giving up the shares (seller/gifter)
• Transferee: The person or company receiving the shares (buyer/recipient)

Details of the Shares Being Transferred

Here are the most important share transfer details to document:

• Class of shares (ownership restrictions  and privileges, e.g, voting rights)
• Quantity (How many are being transferred)
• Certificate numbers (To verify ownership)

Common Errors to Look Out for:

The simplest mistakes in company names or shareholder addresses can delay or even halt the entire transfer process. So, always double-check;

• Exact registered company name (Not just the trading name): If your company is registered as “ABC Holdings Ltd” but you write “ABC Holdings Limited,” the form could be rejected.
• Company registration number
• Full legal names of shareholders (No nicknames or diminutives)

How to Handle Consideration and Stamp Duty Requirements

• Consideration is the amount paid for the shares.
• Stamp duty is the tax on share transactions.

Depending on the amount of the share transaction, if it’s above a certain amount, the receiver (transferee) would have to pay tax on it. If the share was a gift, you should indicate that there was no consideration to avoid unnecessary tax assessments.

Signatures, Witnesses, and Legal Validations

A stock transfer form isn’t valid without:

• Signatures from both parties: if you’re using a digital stock transfer form, ensure you confirm if the local laws allow you to use digital signatures for stock transfer.

• A witness (required by most jurisdictions)

• Company secretary approval (for some private companies)

Using a Digital Stock Transfer Form vs. Paper-Based Forms

Online forms are less error-prone compared to physical forms, especially when they have an auto-validation feature. They are easier to process and streamline your transfer process. Here’s a side-by-side comparison:

Common Errors That Delay Stock Transfers (And How to Avoid Them)

• Missing signatures: Always have both parties sign, and if you require a witness, make sure the witness signs too.
• Incorrect share class: Verify the share class you’re transferring before submitting your form. Even if you have the correct share certificate, if you categorize it wrongly, your transfer won’t be completed unless they verify beyond a reasonable doubt that you’re transferring the right category of shares, further delaying or cancelling the process.
• Wrong stamp duty calculation: Ensure you speak with your accountant and follow the right calculation for stamp duty
• Illegible handwriting: It would be difficult for them to approve your transfer if they can’t make out the words on the form, so ensure your writing is very clear. You can also use a digital form to collect this information, so the words are clear regardless of either party’s handwriting.

What Happens After You Submit the Stock Transfer Form?

Your transfer goes through multiple stages before it gets approved. Here is how it works: 

• Company approval: After filling out and submitting the form, the board/secretary reviews the transfer information and confirms if it’s valid or not.
• Share certificate update: If the company approves the transfer, the next step is to change the certificate to carry the transferee’s information. So, they will cancel the old certificate and issue a new one to the transferee.
• Registrar update: After updating the certificate information, they have to take it to the registrar to record the new ownership and ensure it’s legally binding for future reference.

How to Store and Track Completed Stock Transfer Forms Securely

It depends on the kind of transfer forms you use. For example:

• Physical copies should be locked in a filing cabinet and scanned to your cloud storage for backup.
• Digital copies should be stored in an encrypted cloud storage with audit logs. You can also print physical copies to be locked in a safe. You should also use a centralized tracking system to monitor pending and completed transfers.

Best Practices for Companies Managing Multiple Share Transfers

• Use a standardized template to avoid inconsistencies in data collection
• Automate reminders for pending signatures
•  Use a compliance checklist to ensure nothing is missed

FAQs About Filling Out Stock Transfer Forms

• Can I backdate a stock transfer form?

No, this is considered fraud; always use the actual date of transfer.

• Do I need a lawyer to complete a stock transfer form?

Not usually, but complex transfers like estate transfers may require legal advice.

• How to fill a dis slip for a share transfer?

A “dis slip” ( a share transfer form or deed of transfer) requires details of the seller (transferor), buyer (transferee), company name, class of shares, number of shares being transferred, and the consideration (price). Both parties (transferor and transferee) need to sign, and it may require witnessing.

• How to fill up the stock statement form?

This usually refers to a record of your stock holdings, not a transfer document. The brokerage or company fills it out and summarizes your investments.

• How do I transfer ownership of a stock certificate?

You need to endorse the transfer by signing the physical stock certificate. You’ll also need a separate stock power form (or the transfer form itself) to collect the details of the new owner and submit to the company’s transfer agent.

• How to fill out a share certificate?

The company typically issues share certificates or its transfer agent, not filled out by the individual shareholder for transfer. They contain details like the shareholder’s name, number of shares, and company information. When transferring, you have to surrender your certificate (transferor), and the new owner will get a new one detailing their ownership.

How Formplus Makes Stock Transfers Easier and Error-Free

Our form builder simplifies stock transfers by eliminating manual paperwork and reducing the risk of errors. Here’s how we do it:

• Auto-filled Details: Our pre-fill feature helps you to add your company and shareholder information, reducing repetitive data entry and potential typos. So, when the transferor wants to fill out the form, by just typing out a part of their name, the rest of their information pops up, and they can select without having to manually fill out the form.
• Real-time Error Detection: The auto-validation feature checks for errors as the parties fill out the form, preventing mistakes like incorrect share numbers or missing information. For example, email fields will only take email address format, and numbers will only take numbers. You can also make all important fields required to prevent missing fields.
• Secure E-signatures: Our e-sign feature ensures the transfer is legally binding and secure, eliminating the need for printing, signing, and scanning physical documents.
• Prebuilt template: The stock transfer form template allows you to collect all the essential information you need from the transferor and transferee without having to build from scratch, saving you time. You can also customize the questions to better fit your stock transfer process.

Getting Started with Stock Transfer Forms

Stock transfer forms make your transfer process easier if they’re filled correctly. Even the slightest error can delay or invalidate your stock transfer process, so ensure you double-check for errors and use a form builder that helps you prevent common mistakes, such as skipping important details like the share certificate, date of transfer, etc.

We hope this guide helps make your stock transfer process more seamless, and here’s a template to get you started.