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General principle:

Once the legal owner of shares delivers to his donee the share certificate and properly executed share transfer form relating to those shares, he will have done all within his own power to transfer the shares to the donee.


Re Rose [1952] 1 All ER 1217


Eric Rose executed two transfers of shares in a company called Leweston Estates. The first transfer was expressed to be in favour of his wife- in consideration of love and affection. Second transfer also in her favour and another individual on certain trusts. Two transfers presented for stamping on April 12 1943 and then presented to the Co. for registration on June 30 1943. Rose died a few years afterwards, and the question arose as to whether a sufficient length of time in accordance with various finance statutes had elapsed before his death so that these shares need not be taken into account for assessing death duty on his estate.


The deceased had done all in his power to divest himself of the shares and to vest them in the transferees, and the transfers were effective as between the deceased and the transferees to divest the deceased of beneficial ownership and to constitute the transferees the beneficial owners of the shares; the circumstances that the transferees must, to perfect their legal title, apply for and obtain registration, did not prevent the transfers from so operating, and pending registration the deceased was the trustee for the transferees of the legal estate in the shares which still remained in him; and therefore, the gift of the beneficial interest in the shares had been made and completed prior to April 10 1943, and no estate duty was exigible. While giving his judgment Evershed MR said:

“…The settlor did everything which, according to the nature of the property comprised in the settlement, was necessary to be done by him in order to transfer the property- the result necessarily negatives the conclusion that, pending registration, the settlor was a trustee of the legal interest for the transferee”.


Generally, transferring shares in a private company requires the use of the proper instrument of transfer and the registration in the company’s books. The Companies Act 2006 outlines the procedure that is required to be followed in order to transfer shares in a private company.

Re Rose


Joby handed a share certificate for his entire holding of shares in Dopey Ltd. (a private limited family company) to his godson Nigel. Nigel was then appointed a director in that company. The purported gift to be valid, the formality requirements in s.1 Stock Transfer Act 1963 must be complied with: 1) a share certificate delivered; and 2) a stock transfer form signed; 3) transfer registered by the company. In this case, the first element is satisfied. Nonetheless, nothing indicates the latter two requirements are met. Therefore, the legal title of the shares likely remained with Joby. However, the transfer might be recognised in equity in two ways. Firstly, the rule in Re Rose [1952] – if the transferor has done everything in his power to make the transfer, it is recognised in equity. Applied, Joby did not make “every effort” and he could do more, such as completing the stock transfer form in the two months before his death. Hence, Re Rose probably could not be applied. Secondly, the principle in Pennington v Waine [2002] – a transfer is recognised in equity if denying it is unconscionable. However, it is wrong to assume Pennington is loosely applied to “perfect an imperfect gift” (Curtis v Pulbrook [2011]). For equity to step in and apply Pennington. 1) “immediate gift” must be intended, and 2) the recipient must rely on it detrimentally. Applied, although Joby and Nigel are close, Nigel is not his family member. “Giving” the entire family business to a trusted non-family member after receiving tax advice does raise some suspicion that the transfer was for tax purposes but not to gift. However, Nigel was appointed the director shortly after the transfer. Due to the temporal proximity of the two events, it is also highly possible that a gift was intended to induce Nigel’s acceptance of the role. If the appointment was conditional upon the gift, there was detrimental reliance (Pennington), and logically, the intention to gift immediately was also be present. Nigel is entitled to the beneficial interest of the shares, which is now held on trust by Joby’s estate. However, if the appointment and the purported disposition are not connected, then the legal and equitable title of shares never left Joby and they are part of Joby’s estate.

Re Rose

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