Will a stock transfer form be effective to transfer shares in a company, where the stock transfer form purports to transfer more shares than the transferor holds in such company?

It is assumed for the purposes of this Q&A that the Shares being transferred by the transferor to the transferee are fully paid certificated shares held in a private Limited company incorporated in England and Wales.

What is a Stock transfer form?

A stock transfer form is an instrument of transfer of shares in a company.

Section 770 of the Companies Act 2006 (CA 2006) provides that a company may only register a transfer of shares in a company if, among other things, a proper instrument of transfer has been delivered to it.

CA 2006 does not set out any specific consequences of a breach of CA 2006, s 770. However, any purported registration of shares in reliance upon an instrument of transfer which is not a 'proper instrument of transfer' may be a nullity and ineffective, such that the legal title to the shares has not been transferred.