A Final Bit of Theft.
My secret squirrel legal eagle correspondent pointed me at this interesting bit of legal analysis:
Under our law, transfers of shares in a company have to be made by a formal written transfer document, which is then entered in a register to transfer ownership. The register is the definitive record of legal ownership. It is unlawful to change the ownership register without a transfer form and having paid any necessary stamp duty.
This may seem an abstruse and rather subtle thing, but actually, it’s quite a nasty situation.
In essence, if you start a company and die without someone to inherit your wealth, then the shares in the company (along with any assets it may have) wind up in the greedy claws of the state. Furthermore, if you sell your shares to a foreign company and don’t register the transfer form (and pay the stamp duty), then:
You carry out your merger, and the new entity trades happily for years. The old pre-merger corporation disappears by operation of law or is dissolved, depending on the jurisdiction. Then you undergo due diligence for a financing, disposal or IPO, and someone asks about ownership of the UK subsidiary. The shares are registered in the name of OldCo; there was no transfer document transferring the shares into the name of NewCo. No problem, says your English lawyer. All we need is a transfer from OldCo to NewCo. But OldCo has ceased to exist. In some countries that happens at the moment of merger, so there are no officers able to represent OldCo and sign a transfer even immediately after the merger. The shares are bona vacantia and vested in the Crown.
What can be done about this? In the UK, if we discovered that company had been dissolved whilst still owning assets, we could apply to the court to restore the old company – thought there are time limits. That is unlikely to work in jurisdiction in which the pre-merger entity disappears upon merger.
We can try to persuade the Crown to transfer the shares to the intended owner – but the Treasury Solicitor will probably want to be paid the value of the shares.
Think about that for a moment: two businesses have merged, traded for years or possibly decades, and then the government comes along and says “because you didn’t sign form 42a, we now want you to hand over a chunk of wedge (which could potentially be several millions of pounds) because you didn’t comply with this one silly requirement.”
This requirement does nothing to improve matters for consumers or for businesses. It benefits no-one but the state.
Why is it that people just ignore the endless thieving that governments commit, without even the figleaf of some excuse that it’s for our protection?
January 1, 2012 at 12:00
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Dear Mrs Racoon,
Our Mick has been bullied on the blogs, again. Last night he tore up his
clown costume and turd poems…then locked himself in his room. When his Dad
finds his way home he will be awfully mad. What should I do?
- January 1, 2012 at 14:05
- January 1, 2012 at 18:17
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Dear Mrs T
I would suggest that you get a life, but I fear madam that
it would be a most useless suggestion, for I perceive there is no prospectof
that. That being so madam, the best course that I can suggest is that you
stick your head down the toilet and pull the chain. This may not resolve
your issues, but if you persist in this course it may at least give the rest
of us some relief from your comments and in any event would give us some
satisfaction!
I remain your obedient servant,
Elizabeth Darcy nee
Bennett (Mrs)
Well, not really (*giggle*)
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January 1, 2012 at 19:59
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Dear Mrs Darcy,
Your letter distressed the entire family. An alien punctuation which
omits commas where they are required but includes them erroneously, has
left me feeling quite faint. We are not amused by associated prepositional
errors and the word ‘that’ has been abused several times. (sniffles)
‘Prospectof’ sorely troubled Mr Turatian and he could find no
definition of the word. Indeed, my dear husband would have made no sense
of your letter had he elected to finish reading it by remaining
conscious.
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January 1, 2012 at 11:09
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So Christopher Ian Robinson, from a firm of solicitors in Reading, in a
piece of, what , secret squirrel advertising, wants to advise people to use a
solicitor? With sufficient knowlege and experience.
Nothing wrong with taking professional advice where appropriate – i.e. £££
potentially at issue. Nothing unusual about a bit of catastrophising puff in
promotional material. Not unknown for there to be claims for professional
negligence where there is a financial loss due to some oversight by an
adviser.
I fail to see a theft problem either.
- January 1, 2012 at 10:12
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I’ve no legal training whatsoever.
It may be the result of last-night’s liquid over-indulgence, but I fail to
see any problems.
“In essence, if you ….. die without someone to inherit your wealth, then
…….any assets …. wind up in the greedy claws of the state.” Surely no
different to intestacy?
“Furthermore, if you sell your shares to a foreign company and don’t
register the transfer form (and pay the stamp duty), then……. The shares are
bona vacantia and vested in the Crown.”
So I get the money, emigrate to sunnier climes, and the UK government ends
up with assets, at the expense of a foreign country. Is that “my” problem?
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