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How to add or remove shareholders

Understand how to update shareholders, and the difference between issuing and transferring shares

A shareholder owns part of a company through the ownership of shares. When ownership changes, existing shares must be either transferred or new shares issued.

When to Transfer Shares vs. Issue New Shares

Transfer Shares

Transferring shares means moving existing shares from one shareholder to another. The total number of shares in the company stays the same.

When you might transfer shares:

  • Example 1:
    A owns 100 shares and wants B to hold 50% of the company. A can transfer 50 of their existing shares to B.

  • Example 2:
    A and B each hold 50 shares. If B wants to exit the company, B can transfer their 50 shares to another party - either A or a new shareholder (C).

Issue Shares

Issuing shares means creating new shares and allocating them to a shareholder. This increases the total number of shares in the company and can dilute existing ownership.

Issuing is typically used when:

  • There aren’t enough existing shares to achieve the desired ownership split, or
  • Existing shareholders prefer not to give up (transfer) their shares

When you might issue shares:

  • Example 1:
    A owns 1 share and wants B to hold 50% of the company. Since a single share can’t be split, the company can issue 1 new share and allocate it to B. The company then has 2 shares in total, with A and B each holding 50%.

  • Example 2:
    A owns 100 shares, and the company wants to bring in B with a 20% stake without reducing A’s percentage holding. The company can issue 25 new shares, allocating them all to B. This results in 125 shares in total, with A holding 100 (80%) and B holding 25 (20%).

How to Transfer Shares

  • Both parties agree to the transfer
  • Complete a stock transfer form
  • Update the company’s register of members
  • Issue updated share certificates
  • Report any changes where required

Remember: a transfer does not change the total number of shares in the company - only the ownership.

How to Issue New Shares

  • Check the company’s share structure and authority to issue shares
  • Pass the appropriate shareholder or board resolution
  • Allot new shares to the new shareholder
  • Update the register of members
  • Issue new share certificates
  • File the relevant confirmation with Companies House

Remember: Issuing shares increases the total number of shares in the company and can change ownership percentages for existing shareholders.

How to remove a shareholder

A shareholder cannot usually be removed directly. Instead, their shares must be:

  • Transferred to another person, or
  • Bought back or cancelled (if permitted under company structure and law)

Once the shares are disposed of, the register of members must be updated accordingly.

Important considerations

  • It is best practice to file a confirmation statement after completing a share transfer or share issuance to ensure the company’s ownership structure is accurately updated at Companies House.
  • Depending on the percentage of shares being changed, you may need to file a PSC update.
  • Certain share changes may require legal advice (e.g. buying back shares)

Need help?

We can help you manage share transfers and share issuances. Our services ensure all documentation is completed accurately and all required filings are made with Companies House, helping you stay compliant.