This section is new. The object of it is to prevent any transfer of shares otherwise than by proper instrument of transfer. I will readily admit its purpose is to ensure that there will not be avoidance of payment of proper stamp duty.
SECTION 81.
Question proposed : " That Section 81 stand part of the Bill ".
Is that the only purpose in it ?
That is it.
How could you transfer without an instrument of transfer ?
Orally.
It is only the avoidance of transfer duty that is involved here.
Is there any difficulty involved in the transfer of shares by operation of law in this section ? Shares can be transferred on bankruptcy and on death.
Subsection (2) provides for that. It says that nothing in subsection (1) shall prejudice any power of the company to register as shareholder or debenture holder any person to whom the right to any shares in, or debenture of the company, has been transmitted by operation of law.
This is the power of the company to register, as shareholder, any person. I suppose that provides sufficiently for what I sought.
It is inherent in subsection (2).
The simple transfer operation, say, in an intestacy or a devolution in general ?
I think things are being intermingled here. You can have a transfer by operation of law by which the official assignee in bankruptcy on the one hand, or an executor on the other, is in order as to his rights to stand in the shoes of a shareholder. However, in probate, a specific provision in the articles says that where the executor appears also as a legatee, he can be registered as shareholder without any transfer. As I understand it, subsection (2) is to cover that type of case and it is not to cover the case of the assignee in bankruptcy.
It is meant to cover all transfers by operation of law.
If it covered one, why not the other ?
Because they are not being registered as shareholders. The official assignee in bankruptcy is never registered as shareholder. He is registered as the person entitled to deal with the company's shares. An executor is registered as a person entitled to deal with the deceased person's shares.
Take the assignee in bankruptcy: when it came to the point of transfer, would it not be through a deed by him ?
The Minister came out into the open on the question of revenue and I think I shall come out in the open here. My point is an anti-revenue one. The position now is that an executor who is also a legatee is entitled to become registered without paying any stamp duty. Is he to be entitled now under subsection (2) ? I think he is but I want it to be beyond question.
How did he become entitled ?
By signing a request form instead of a transfer form.
Is that a matter of practice or of common law ?
It is very often done. It seems that under subsection (1) that the request form might be now prohibited.
It surely should be prohibited if it is a transfer of the beneficial ownership from one person to another.
It is not. It is signed by only one person. It is not an instrument as signed by the transferor and the transferee. The present practice is there and it is a most convenient practice. I had considered going so far as to suggest that we should put a clause into Table A to provide a standard form of such request because as it is at present one very often has to write to a company and ask if they have got a specific request form of their own. I am satisfied if the Minister promises to get it examined from the point of view of revenue. I am quite happy to pay stamp duty on a legal transfer as it is but I want the special request form to be retained without stamp duty.
What is the effect of saying : " It shall not be lawful for the company to register a transfer of shares in or debentures of the company unless a proper instrument of transfer has been delivered to the company "? That is in subsection (1). Is there a penalty provided and, if so, where is it ?
It simply means it is unlawful.
But as between the transferor and the transferee, it might be valid.
Is there much involved in this ? I would frankly prefer not to have this subsection because a whole lot of people will avoid stamp duty and I think there might be circumstances in which there would be difficulty. Quite a number of shares are transferred orally. If there is not a great deal of money involved, I would be in favour of dropping this provision.
It is purely to prevent the evasion of stamp duty and the Revenue Commissioners—and, of course, the Minister for Finance, being responsible for the Revenue Commissioners—must try to provide against avoidance of payment of proper stamp duty. I understand it is in the English law since 1928.
Is this the way it is worded in the English section ?
Yes.
It could be argued that the transfer as between transferor and transferee would be regarded as completed but I suppose the effect is that if you are not registered, you could not be regarded as a member of the company in question.
The company would be prohibited from registering the transfer.
Is there provision somewhere for penalties ?
No, there is not. I shall look into it.
I am not looking for penalties at all.
Question put and agreed to.