An Instrument of Transfer is a written instrument that effects a transfer of shares in a company, usually between a buyer and seller.
It is a necessary document required to enable the title of the shares to be transferred from one party to the other. An Instrument of Transfer attracts stamp duty and must be stamped in accordance with the rules set out in the Stamp Duty Act (Cap 312).
A transfer of shares in a Singapore company cannot be made without an Instrument of Transfer. The Instrument of Transfer contains the details of the transferor, the details of the transferee, and the details of the shares being transferred, including the number and type of shares being transferred.
Stamp duty must be paid on the transfer of Singapore shares. An Instrument of Transfer must therefore be taken to the Inland Revenue Authority of Singapore for stamping before the date of execution. However, no penalty will be charged if the Instrument of Transfer is stamped within 14 days after the document is signed if the document is executed locally or within 30 days if it is executed overseas.
When drafting an Instrument of Transfer, it is important to focus on a number of key clauses, in particular: