5.8 Shares as gifts

It is acceptable to promote the sale of shares as gifts to third parties, subject to the active agreement and eligibility of the gift recipient to become a member of the society. The gift recipient must confirm that they are eligible and agree to become a member before the shares are issued. A deadline should be set for receiving this confirmation, together with a statement made to both the giver and the recipient that if the confirmation is not received by that date, or if the recipient is not eligible or willing to become a member, then the giver will be refunded.  As with all refunds, any administrative charges should be clearly stated and be reasonable.

In the case of time-bound share offers, the shares are not normally issued until the closing date of the share offer, and this date can be used as a deadline for receiving confirmation from gift recipients. But if a society decides to extend this deadline beyond the closing date of the offer, then the funds should be held in suspense either until confirmation is received or the deadline has passed. Additionally, the society should make both the giver and the recipient aware of the difference between the closing date and the confirmation deadline, explaining the consequences for the recipient if the offer is over-subscribed prior to them confirming their application for membership. 

Eligibility for membership is set out in the rules of a society. The most common restriction on membership is a minimum age requirement. Even though there is no legal minimum age for membership of a society, many societies have rules stating a minimum age, typically 16 or 18.  If the society has a minimum age rule, it must make this clear in its share offer document and in any associated literature relating to shares as gifts.

If a society promotes the sale of shares as a gift for a person below the minimum age for membership, then the following administrative arrangements should be made. The giver must be eligible for membership in their own right, as the purchase of shares will be in their name, and treated as their property, and subject to the same terms and conditions that apply to the whole share offer. The purchaser should nominate the gift recipient as their beneficiary.  The society should obtain the personal details of the gift recipient. On the day the recipient becomes eligible for membership, the society should write to both the giver and the recipient, asking the giver to consent to the withdrawal of the allocated share capital, and asking for recipient’s consent to membership of the society and the re-investment of the share capital. Normally, the recipient’s consent should be obtained before the giver’s consent is requested, in case the recipient does not wish to accept the gift in the form of shares, in which case it will be up to the giver to determine what will happen to the share capital, subject to the society’s terms and conditions for withdrawal.