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.
See related topic: What is a dividend?
Shares in public companies are often held by parents or grandparents, etc.
as trustees for children, or some form of investment trust is used.
Incorporation Services Limited provides an expert service
for all your company formation and company law requirements, including advice
about share allotments and transfers.
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