How to Change Company Shares on Companies House [Step-by-Step Guide]

If you're considering changing your company's shareholding structure – whether by transferring shares, issuing new ones, or modifying the rights attached to them – you need to follow the proper process.

Companies House requires specific forms, resolutions, and records to reflect any changes in ownership and capital structure accurately. Failing to do so could result in penalties, legal complications, or shareholder disputes.

In this guide, we explain everything you need to know about changing company shares in the UK. 

From the initial planning stages to the final filings with Companies House, you'll learn how to carry out these changes properly and legally.

Step 1: Understand the type of share change

Start by identifying the exact nature of the share change. Each type affects your company’s structure differently and comes with specific filing obligations.

1. Transferring existing shares

This is a change in ownership of existing shares. It does not alter the company’s total share capital but reallocates it. 

A shareholder might sell their shares to an external party or gift them to a family member or employee. Share transfers are often used during succession planning or restructuring.

Example: If a founder wants to retire and transfer their 30% stake to their adult child, this would be recorded as a share transfer. If no money changes hands, the consideration on the stock transfer form would be marked as 'Nil.'

2. Issuing new shares

This involves creating new shares and allocating them to new or existing shareholders. It increases the company’s total share capital and often dilutes existing shareholders’ percentages.

Issuing new shares requires a board resolution and filing Form SH01 with Companies House within one month.

Example: A growing company may issue 1,000 new ordinary shares to a venture capital firm in exchange for a £100,000 investment. The board must approve this allotment, and the company must file SH01 and update its statement of capital.

3. Cancelling or re-denominating shares

Cancellation reduces share capital, usually following a share buyback, while re-denomination changes the currency or nominal value of existing shares. 

These more advanced changes usually require a special resolution (at least 75% shareholder approval) and filing a new statement of capital.

Example: A company may cancel shares held by a departing director as part of a buyout agreement. The remaining shareholders pass a special resolution, and the reduction is reported to Companies House.

Step 2: Check company rules and legal agreements

Before proceeding, review your company's Articles of Association and any Shareholders’ Agreement. These documents contain legally binding rules that may restrict or require approval for certain changes.

Some common provisions to look for include:

Example: If your shareholders' agreement states that any new shares must be offered to current shareholders before being issued externally, ignoring this could result in the allotment being challenged and reversed.

If your change contradicts these agreements, it may be invalid or challengeable in court. Legal advice is highly recommended if you’re unsure.

Step 3: Transfer shares (If applicable)

Here’s how to legally transfer existing shares:

1. Complete a stock transfer form

This document records the transfer between two parties. You must include:

If shares are transferred for non-cash consideration (e.g., property or services), describe the nature of the payment and any linked agreements.

Example: A co-founder may transfer shares to a business partner in return for taking over a lease or intellectual property, but this must be noted on the form.

2. Assess and pay stamp duty

If the transaction value exceeds £1,000, 0.5% stamp duty is payable by the buyer. Submit the form and payment to HMRC within 30 days. HMRC no longer physically stamps forms, but will email confirmation.

3. Submit to the Company Registrar

Once stamp duty (if applicable) is settled, send the form and original share certificate to the company’s secretary or registrar. A new certificate will be issued to the transferee.

4. Update internal records

Update the Register of Members to reflect the new shareholder and date of transfer. If the transferee now owns 25% or more of the company, update the PSC register and file the appropriate form (e.g., PSC01) within 28 days.

Step 4: Issue new shares (If applicable)

Issuing new shares increases your company’s share capital and changes ownership percentages. This process is often used to raise capital, reward employees, or adjust ownership among existing shareholders. It must be done properly to avoid disputes and penalties.

1. Hold a board meeting

Before any shares can be issued, the directors must approve the allotment at a board meeting. The decision should be formally recorded in the minutes of the meeting. The resolution should cover the number of shares to be issued, the price per share, the class of shares, and the recipient(s).

2. Check for authority to allot shares

You must ensure the directors have the authority to allot shares. This authority may come from the Articles of Association or a resolution passed by shareholders. 

If the existing authority has expired or is insufficient, a new shareholder resolution must be passed: either ordinary or special, depending on the Articles.

Example: If the company’s Articles only allow the issue of up to 1,000 shares and 1,500 shares are now being proposed, shareholder approval must be obtained to extend the authority.

3. Waive pre-emption rights

Pre-emption rights give existing shareholders the first right to buy new shares in proportion to their existing holdings. If these rights exist and the shares are being offered to outsiders, they must be waived by a majority of existing shareholders (typically via a special resolution or written consent).

Example: A company with four shareholders wants to bring in an external investor. All four shareholders must waive their right to buy the new shares first.

4. Determine the share price and consideration

The shares must be issued at a fair price. The company should document how the share price was determined, specifying whether it was based on a business valuation, a previous funding round, or a market rate. If the shares are issued at a premium (above their nominal value), this must be reflected in the Statement of Capital.

Example: A company with £1 nominal shares decides to issue them at £5 per share due to recent growth. The additional £4 is treated as share premium.

5. File Form SH01 with Companies House

Within one month of issuing new shares, file Form SH01. This form details the allotment, including:

If this form is not submitted within the deadline, Companies House may issue penalties, and the transaction could be deemed non-compliant.

6. Update the Register of Members and issue Share Certificates

The company must update its Register of Members to show the new shareholder(s) and the number of shares held. Share certificates must also be issued within two months of the allotment.

Example: After issuing 500 shares to a new investor, the company enters their name and shareholding in the register and prepares an official share certificate.

7. Update the PSC Register (if applicable)

If the share issue results in a shareholder owning more than 25% of the company or having significant control, the company must update its Register of People with Significant Control (PSC). A notification (e.g. PSC01) must be filed with Companies House within 28 days of the change.

Example: If a new investor receives 30% of the shares, the company must add them to the PSC register and notify Companies House.

Step 5: Maintain accurate internal records

Keeping your company’s internal records up to date isn’t just good practice but also a legal obligation under the Companies Act 2006. These records provide the official account of who owns the company, who controls it, and what authorizations have been made to change share structures.

Failure to maintain accurate records can lead to fines, invalid transactions, or problems during due diligence if you're seeking investment or selling the business. 

Let’s break down each record you must manage.

1. Register of Members

This is your official shareholder register. It must include:

Example: If you transfer 100 shares from John Smith to Sarah Patel, the register must show John as no longer holding those shares and Sarah as the new owner, effective from the transfer date.

2. Register of People with Significant Control (PSC)

If anyone holds more than 25% of the company’s shares or voting rights, or otherwise exercises significant influence or control, they must be listed in the PSC register. 

This includes:

Example: After issuing shares to a new investor, they now control 30% of the company. They must be added to the PSC register and reported to Companies House using form PSC01 within 28 days.

3. Board and shareholder resolutions

Keep records of all decisions made to authorise the change in shares.

This includes:

Example: If the directors approve the issue of new shares and the shareholders waive their pre-emption rights, both the board meeting minutes and signed waiver documents should be retained.

4. Share Certificates

Whenever shares are transferred or newly issued, the company must cancel the old certificate (if applicable) and issue a new one. 

Certificates should include:

Certificates must be issued within two months of the share change.

Example: Sarah Patel buys 500 shares. The company issues Share Certificate No. 004 showing her as the holder of 500 ordinary shares, signed by two directors.

5. Supporting Legal agreements and notices

Keep copies of any stock transfer forms, stamp duty confirmations, notices to shareholders, or letters of consent. These documents serve as a legal audit trail.

Example: If a transfer involves stamp duty, retain the HMRC confirmation email along with a copy of the stamped stock transfer form. Also file any communication sent to other shareholders, especially if rights were waived or resolutions were passed by written consent.

Step 6: Notify Companies House

You must report changes to Companies House promptly. Here’s what to file and when:

Example: If a new investor takes a 30% stake, but you fail to notify Companies House within the deadline, you risk late filing penalties and could jeopardize future due diligence checks.

Understanding resolutions: Ordinary vs Special

Resolutions are formal decisions made by shareholders or directors. 

🔸Ordinary resolution (Over 50% approval): Use this for routine decisions like issuing new shares, if the Articles permit. Board approval is also usually needed.

🔸Special resolution (At least 75% approval):Required for major changes, including:

Example: If your company wants to reclassify existing shares into voting and non-voting categories, this would require a special resolution and the approval of 75% of shareholders.

All special resolutions must be filed with Companies House within 15 days.

Real-world scenario: Founder exit

Let’s say your company has three co-founders. One decides to exit, selling their 40% stake to a new investor. The shares are valued at £20,000.

Here’s what you’d need to do:

Final thoughts

Changing company shares isn’t something to take lightly. Every change – from a simple transfer to a complex restructuring — has legal and financial consequences. Failing to follow the correct process can delay transactions, invalidate agreements, and expose your business to fines.

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