Can a child own shares?

There is no statutory provision prohibiting a child from owning shares. At common law a child will not be bound by a contract to buy shares as they are not 'necessaries'. Some companies will not accept shareholders under the age of 18 years by provision in their articles or terms of issue.

In many family owned companies, shares are allotted to children as a means of providing them with capital assets which may be expected to increase in value as part of longer term inheritance and capital gains tax planning. Paying dividends on such shares can also be useful ways of using childrens' personal allowances for income tax, and to make use of the lower tax rates applicable to dividends.

Public companies often provide that minors may not hold their shares. Such shares are often held by parents or grandparents, etc. as trustees for children, or some form of investment trust is used.

Note that there is now a restriction on children being directors of companies. A director must be over the age of 16.

Company Law Solutions provides an expert service for all your company law requirements, including advice about share allotments and transfers.

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