Share Transfer vs. Share Allotment in Singapore: What Every Business Owner Should Know

As a small business owner in Singapore, there may come a point where you want to bring in a new shareholder or adjust existing ownership among current investors. But the way you go about it makes a legal, financial, and even accounting services-related difference.

Should you transfer shares? Or allot new ones?

Here’s what every director or founder of a private limited company needs to know about share transfers and share allotments — and how to choose the right move for your business.

1. What Is a Share Transfer?

A share transfer is when an existing shareholder sells or gives their shares to another person or entity.

This does not change the company’s total share capital — it simply reassigns existing ownership.

When it’s commonly used:

• Bringing in a new investor to take over an existing partner’s shares
  
• Allowing a co-founder to exit the business
  
• Transferring shares between holding companies or related parties
  

What to consider:

• Must comply with your company’s Constitution and shareholder agreement
  
• May require board and/or shareholder approval
  
• Involves stamp duty (0.2% of purchase price or market value, whichever is higher)
  

From an accounting standpoint, share transfers do not affect the company’s balance sheet — ownership shifts, but capital stays the same.

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2. What Is a Share Allotment?

A share allotment is when the company issues new shares to one or more individuals or entities.

This increases the company’s share capital, as it brings new funds (or consideration) into the business in exchange for ownership.

When it’s commonly used:

• Raising fresh capital to fund business growth
  
• Rewarding founders or employees with equity
  
• Formalising external investor stakes
  

What to consider:

• Must be authorised by the company’s Constitution and approved by directors
  
• Needs a return of allotment (Form 50) to be filed with ACRA
  
• May trigger additional compliance reporting (e.g. beneficial ownership updates)
  

From a corporate governance perspective, allotments change both ownership and capital structure, so timing, valuation, and documentation must be carefully managed.

3. Key Differences at a Glance

4. Which One Is Right for Your Situation?

If your company needs new capital to grow, a share allotment might be the right move. But if you’re simply changing who owns existing shares, a share transfer will do.

Before proceeding, always check:

• Your company’s Constitution
  
• Whether approvals are needed from directors or shareholders
  
• Tax and stamp duty implications
  
• Accounting treatment and reporting timelines
  

Summary

Understanding the difference between share transfer and share allotment is essential for making informed decisions about your company’s ownership structure. Both have different legal, financial, and compliance consequences — and choosing the right one depends on your goals.

Plan carefully, document every step, and make sure your decisions align with your business strategy and statutory obligations.

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