Share Donation Agreement Template

In plain language: Identifies the donor and donee by full legal name and address, states the nature of the transaction as a gift, and provides the commercial context for the donation.

Common mistake: Using a trade name instead of the registered legal entity name for corporate donors or donees. This creates a mismatch with the company's share register and can delay or void the transfer.

In plain language: Precisely identifies the shares being donated — company name, registration number, share class, number of shares, and the nominal or par value per share.

Common mistake: Omitting the share class or specifying shares by percentage only. If new shares are issued between signing and completion, a percentage-only description creates ambiguity about exactly which shares transferred.

In plain language: The donor confirms they are the sole legal and beneficial owner of the shares, have authority to donate them, and that the shares are free from all liens, charges, and encumbrances.

Common mistake: Limiting warranties to legal ownership without confirming the absence of encumbrances. A pledge or security interest the donee is unaware of can be enforced against the shares after transfer.

In plain language: Lists the requirements that must be met before the transfer completes — typically board approval, pre-emption rights waiver, and execution of the stock transfer form.

Common mistake: Ignoring pre-emption rights in the company's articles of association or shareholders' agreement. Existing shareholders may have a right of first refusal that applies even to gratuitous transfers in some jurisdictions.

In plain language: Sets out what must happen on the completion date — delivery of the stock transfer form, share certificates, and any other instruments needed to effect the transfer.

Common mistake: Not specifying a completion date or delivery mechanism. Open-ended completion obligations create disputes about when the gift is actually effective and when tax events are triggered.

In plain language: Each party acknowledges their own responsibility for any tax liability arising from the donation — gift tax, capital gains tax, or stamp duty — and confirms they have taken independent advice.

Common mistake: Omitting the tax acknowledgment clause entirely. Without it, a donee who later faces an unexpected tax liability — such as inheriting the donor's low cost basis — has no documented confirmation they were informed of the risk.

In plain language: Expressly states that the donation is made for nil or nominal consideration, distinguishing the agreement from a sale and establishing the gratuitous nature of the transfer.

Common mistake: Inserting nominal consideration of $1 to 'ensure enforceability' without legal advice. In some jurisdictions this can transform the transaction into a sale with different tax consequences; in others, gratuitous transfers are fully enforceable without nominal consideration.

In plain language: Sets out any post-donation restrictions on the donee — lock-up periods, drag-along obligations, or ongoing adherence to a shareholders' agreement.

Common mistake: Failing to require the donee to adhere to an existing shareholders' agreement. If the donee is not bound by that agreement, they may act as a rogue shareholder — voting against the majority or refusing drag-along obligations.

In plain language: Prohibits both parties from disclosing the terms of the donation to third parties, except as required by law, regulatory authorities, or professional advisors.

Common mistake: No confidentiality clause at all, especially relevant in private company settings. Public disclosure of the gift can trigger valuation disputes with other shareholders or premature regulatory scrutiny.

In plain language: Specifies which jurisdiction's law governs the agreement and how disputes are resolved — typically the courts of the jurisdiction where the company is incorporated.

Common mistake: Choosing a governing law that differs from both the company's jurisdiction of incorporation and the parties' locations without legal advice. Cross-border mismatches can make the agreement unenforceable in the jurisdiction where you actually need to rely on it.

A share donation agreement is a legally binding contract through which a donor transfers ownership of shares in a company to a donee for no monetary consideration. It records the parties' identities, the exact shares being gifted, the donor's warranties of clear title, any conditions to completion, and each party's tax acknowledgments. Unlike a share purchase agreement, no price is paid — the transfer is a gift.

You need one whenever you gift shares rather than sell them — common scenarios include transferring equity to family members in estate or succession planning, donating shares to a charity or nonprofit, rewarding employees or advisors with shares outside a formal option plan, and restructuring share ownership within a family group. A written agreement protects both parties and creates the paper trail required for tax compliance.

Yes, a properly executed share donation agreement is generally enforceable in most jurisdictions. The enforceability of gratuitous transfers varies by jurisdiction — some require consideration or a deed formality to be binding. In common-law jurisdictions, a deed of gift executed with the appropriate formalities is typically used when consideration is absent. Consult a lawyer to confirm the required formalities for your jurisdiction.

Tax treatment depends on the jurisdiction and the parties involved. In the US, the donor may owe gift tax if the value of the shares exceeds the annual exclusion limit ($18,000 per donee in 2024) and must file IRS Form 709. The donee typically acquires the donor's original cost basis (carryover basis). In the UK, a gift of shares to an individual may trigger capital gains tax for the donor at market value on the transfer date. Charitable donations of listed shares in the UK and Canada often attract favorable tax treatment. Always obtain independent tax advice before completing a share donation.

In most private companies, yes. Articles of association typically require the board to approve any share transfer — including gifts — and to update the share register accordingly. Some articles grant the board discretion to refuse a transfer. Additionally, if a shareholders' agreement is in place, pre-emption rights or transfer restriction provisions may require waivers from existing shareholders before the donation can proceed.

The key distinction is consideration. A share purchase agreement transfers shares for an agreed price — creating a taxable sale event for the seller. A share donation agreement transfers shares for nil consideration — it is a gift. The tax treatment, valuation requirements, and legal formalities differ significantly between the two, particularly for capital gains and gift or inheritance tax purposes.

Yes, shares in private companies can be donated to registered charities, but the process is more complex than donating publicly listed shares. The charity must be willing to accept unlisted shares, which may be difficult to value and liquidate. In the UK, donations of qualifying shares to charity are exempt from capital gains tax for the donor. In the US, a qualified appraisal is required for donations of unlisted securities valued above $10,000. Confirm the charity's acceptance policy and obtain a valuation before proceeding.

Yes. A share donation agreement should be executed by both the donor and the donee. The donee's signature confirms acceptance of the shares and acknowledges any conditions, restrictions, or obligations attached — particularly adherence to a shareholders' agreement or lock-up period. An unsigned donee creates uncertainty about whether the gift was accepted and may leave the transfer incomplete for legal and tax purposes.

For straightforward gifts of private company shares between family members in a single jurisdiction with no complicating factors, a well-drafted template is a solid starting point. Engage a lawyer when the donation involves significant value, cross-border parties or companies, complex shareholders' agreements, charitable recipients, or when the donor's tax exposure is material. A 2–4 hour review typically costs $400–$1,000 and is strongly recommended for any donation valued above $50,000.