Defining declaration of assigning a share
The declaration of assigning shares is a legal document that is used to transfer the ownership of the shares of a company from the owner to the buyer/assignee of the shares. The document must mention the name and designation of the concerned parties, the date when the share transfer took place, the number of the stock/share certificate and also the number of shares being transferred.
The declaration of assigning shares is also used in concurrence with subscription and share purchase agreements when the payment is made for the shares by the vendor or seller. Both the buyer and the seller of the shares need to sign the declaration.
The estate frees can also use the declaration of assigning shares. For this, the document can be made with clauses that state the intention of the parties in following and obeying the tax regulations in the country, providing a fair mechanism for price adjustment in case later on it is found out by the tax authorities that the value at which the share was priced is inaccurate. The declaration will also contain a clause and will mention the power of authority onto a corporation to make the necessary elections to comply with the local tax rules and regulations.
The core elements of a declaration of assigning shares of a company in the UAE
This will include the background of the share transfer, defining the transfer of shares, purchase price, date of share transfer, liability, payment, creditors, closing, representations, and warranties. The information that is to be mentioned in a share assignment declaration is as follows-
- Information about the company
- Expectations of the parties involved in the transaction that is the buyer and the seller
- The agreement of purchasing the shares
- Rights attached to the ownership of the shares
- Preferences for voting
- Preferences stating redemption and liquidation
- Termination terms before completion
- Confidentiality terms
- Details of returns payout
In the UAE, underlying terms and conditions must be mentioned in the declaration of assigning shares. The clauses that state any terms and conditions should favour the private company. The shareholders must comply with the terms and conditions mentioned on the declaration for the declaration to be enforceable. The document may contain an indemnity clause as well which states that the purchaser/assignee will have to repay or indemnify if the company suffers a monetary loss from misrepresentation.
The documents that must accompany the declaration of assigning shares
The related documents that must be there along with this declaration are as follows-
- Shareholder’s resolution- the shareholder’s resolution confirming the assignment of shares is required in the bookcase of a privately held firm.
- Minute book-The minute book is a book where the records related to the business are kept. The copies of the declaration of assigning shares must be kept in the minute book of the company/corporation which has issued the assignment of shares.
- Resolution of the directors- ratification of assignment of shares is necessary with the directors of a corporation or the company whose shares have been assigned.
- Agreement of subscription- this is the assignment agreement that is there between the vendor and the purchaser of the shares.
Common mistakes which may occur while writing a declaration of assigning shares
The declaration of assignment of shares is a legal document and, it has to be written very precisely. Many people may make some common mistakes in drafting the same. These mistakes are as stated below. One should be careful, not doing these mistakes when writing the same.
- Complicated document- this document requires the legal information to be covered throughout the document, however, still one should always try to make it as simple ad straightforward as it can be. As an example, instead of repeating all the information mentioned in a memorandum, one can say that the purchaser has read a private placement memorandum. This avoids potential confusion in cases, especially when the disclosure is paraphrased.
- Lack of legal advice or not getting the help of legal advice- since it’s is a legal document; one must not forget to take legal advice from experienced people who have expertise in corporate and finance legislation. A corporate lawyer in the UAE will certainly be helpful to ensure that our best interest is protected and will also explain the legalities of the document. Public Notary Dubai helps you in making this document legalized by notarizing the same.
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Acknowledgement of the declaration of assigning shares
Lastly, the declaration of assigning shares needs an acknowledgement. The acknowledgement is considered an act of a legal entity declaring that the signatures on a legal document were voluntary. The document shall be executed as a free and voluntary act of the signatories.
This document also needs notarization by the public notary as this process legalizes the declaration and turns it into a public instrument. Once a document turns into a public instrument, it becomes self-authenticating, which means that no other evidence is required to prove the execution of the document.
If you have to get your documents notarized, contact us at Public Notary Dubai to it legalized.
Syed Hassan Ali has an experience of 13 years and is highly specialized in providing legal consulting for all types of notary requirements. By utilizing his diverse and deep knowledge, he has consistently aided individuals and organizations in finding flexible and timely solutions.