According to New Zealand legislation, a company must notify the New Zealand Companies Office when updating, adding, or removing a share allocation. A share transfer is a big decision for any company, so care and attention are required, particularly in the documentation and consultative process. If it’s your first time to transfer a share, then it’s best to seek professional advice so that you don’t sign an agreement that may result in you losing out on any potential benefits such as imputation tax credits.
In any negotiation with a party about a share transfer, numerous documents must be considered. There should be a sale and purchase agreement to record information such as the price for shares, the scheduled date of transfer, and the party that will become the new shareholder for that holding. In addition, a written record must be kept of all the share transfer documents that were prepared and signed.
Before you decide to transfer your company share, you should consider the following factors:
1. What will be the amount of loss carried forward?
2. Will there be retained earnings?
3. What are the current details of the shareholder accounts?
4. What are the details of the imputation tax credits?