Direct Transfer Agreement Template: What To Include

Maya runs a small design agency through one limited company, but she now wants to move the agency's website, client contracts, equipment and brand assets into a new company she's set up with a co-founder.

On paper, it feels simple: the old company owns the assets, the new company will use them, and everyone agrees. But if the transfer isn't recorded properly, you can end up with awkward questions later about who owns what, who has to pay which debts, and whether a customer or supplier ever agreed to the move.

A direct transfer agreement can help you put the deal in writing so the transfer is clear from day one. It doesn't have to be overly complicated, but it does need to match the assets, contracts and risks in your business.

What Is A Direct Transfer Agreement?

A direct transfer agreement is a contract that records the transfer of assets, rights or obligations from one party to another.

In a business context, you'll usually use it where one company, partnership or sole trader is transferring selected assets to another business. This might be part of a restructure, a group company transfer, a founder split, a business sale, or a move to a new trading entity.

The agreement should clearly state:

• Who is transferring the assets, often called the transferor.
• Who is receiving the assets, often called the transferee.
• What is being transferred, such as equipment, intellectual property, website assets, customer contracts or stock.
• What price is being paid, if any.
• When ownership passes, including any conditions that must be met first.
• Which liabilities move across, and which stay behind.

Think of it as the paper trail that shows the deal actually happened. Without it, you may find that an asset appears in one company's accounts, is used by another company, and nobody can prove the terms of the transfer when a dispute, audit, investor review or sale process comes up.

A direct transfer agreement is different from an asset purchase agreement or business sale agreement, which is often used for a more formal business sale. There can be overlap, but a direct transfer agreement is usually more focused on the transfer itself and can be tailored for internal transfers, selected asset movements or simpler asset deals.

When Should You Use A Direct Transfer Agreement?

You should use a direct transfer agreement when your business needs a clear written record of assets, rights or obligations moving from one entity to another.

It's especially useful where the transfer isn't just a one-off payment for a single item. If you're moving a bundle of assets, customer arrangements or business rights, a written agreement helps avoid confusion.

Common situations include:

• Moving assets between companies, such as from an old trading company to a new limited company.
• Restructuring a group, where one company will hold intellectual property and another will trade with customers.
• Bringing in a co-founder, where business assets need to sit in a newly incorporated company.
• Separating business lines, for example moving your eCommerce operations into a separate entity.
• Transferring a website, domain name or software product to a company that will commercialise it.
• Documenting a handover after a founder or partner exit, so there's no debate about who owns key assets.

For example, Maya's old company transfers design equipment worth 12000 pounds, a website and domain valued at 3000 pounds, brand assets valued at 5000 pounds, and two client contracts worth around 3500 pounds per month in recurring fees. Her direct transfer agreement states that the new company pays 20000 pounds on completion and takes over only the listed assets and approved client contracts.

That matters because it stops the new company accidentally taking on unrelated old debts, while giving the new company a clean record of ownership for the assets it needs to trade.

What Assets And Liabilities Should The Agreement Cover?

The agreement should cover every asset being transferred and every liability that will either move across or stay with the transferor.

This is where many template documents fall short. They might say that assets are being transferred, but not identify them properly. If the asset list is vague, you may struggle later to prove that a particular domain name, customer list, software codebase or piece of equipment was included.

Assets To List Clearly

Your agreement should describe the assets with enough detail that someone outside your business could understand what is included. Depending on your business, this might include:

• Plant, equipment, vehicles, tools, furniture and stock.
• Domain names, websites, hosting accounts, social media handles and digital assets.
• Trade marks, logos, brand names, copyright materials, designs and software code.
• Customer lists, supplier lists, goodwill, supplier agreement records and business records.
• Contracts with customers, suppliers, contractors or service providers.
• Licences, permits or registrations, where they can legally be transferred.
• Debtors, work in progress and prepaid expenses, if these are part of the deal.

Liabilities To Deal With

Just as importantly, the agreement should say what happens to liabilities. These might include unpaid supplier invoices, refund obligations, warranty claims, finance arrangements, lease obligations, employee-related liabilities or customer complaints.

You don't want to assume a liability has moved across just because an asset has. Some liabilities may need creditor consent, and some may stay with the original business unless there's a proper novation or separate arrangement.

If employees are moving with part of the business, you may also need employee transfer documents and should consider the Transfer of Undertakings (Protection of Employment) Regulations 2006, usually called TUPE. TUPE can transfer employees and certain employment liabilities automatically in some business transfers. This is very fact-specific, so it's worth getting advice before you sign anything if people are involved.

Do You Need Consent To Transfer Contracts Or Rights?

Yes, you often need consent to transfer contracts, licences or certain rights, because many of them can't be moved just by signing a transfer agreement between the old and new business.

This is one of the biggest traps in asset transfers. You can transfer ownership of a desk or a laptop fairly easily, but contracts and permissions are different. The other party may have a say.

Assignment, Novation And Consent

For contracts, there are two main concepts to know:

• Assignment usually transfers the benefit of a contract, such as the right to receive payment. The burden of obligations usually doesn't transfer by assignment alone.
• Novation replaces one party with another, so the new party takes over both rights and obligations. This normally needs the consent of all parties.

Say Maya has a customer contract where her old company provides monthly design services for 2000 pounds. If the new company simply starts invoicing that customer, the customer could refuse to pay the new company if they never agreed to the transfer. A short deed of novation or written consent may be needed so the customer accepts the new company as the service provider.

You should check the transfer clauses in each contract before signing the direct transfer agreement. Look for words like assignment, novation, change of control, subcontracting and consent.

Other Consents To Check

Depending on the assets, you may also need:

• Landlord consent if you're assigning or transferring a commercial lease.
• Lender or finance company consent if assets are subject to finance or security.
• Software provider approval if licences are personal to the original company.
• Regulator or licensing body approval if your industry licence can't be transferred automatically.
• Data protection checks where personal data is moving, especially under the UK GDPR and Data Protection Act 2018.

For intellectual property, some transfers must meet specific legal requirements. For example, an assignment of copyright must be in writing and signed by or on behalf of the copyright owner under the Copyright, Designs and Patents Act 1988. If a UK registered trade mark changes owner, you must notify the UK IPO and record the change of ownership, usually using form TM16 for a full assignment or TM16P for a partial assignment. This is separate from the assignment document itself.

What Should A Direct Transfer Agreement Template Include?

A direct transfer agreement template should include the core clauses that identify the parties, assets, price, timing, consents, liabilities and post-transfer obligations.

A template can be a helpful starting point, but it shouldn't be treated as a finished legal document. The right wording depends on what you're transferring, whether third-party consent is needed, and what risks each side is taking on.

Here is a practical fill-in outline you can use to plan the document before a lawyer tailors it:

1. Parties - insert the full legal names, company numbers and registered office addresses for each company or business.
2. Background - explain why the transfer is happening, such as a restructure, founder arrangement or selected asset sale.
3. Definitions - define the transferred assets, excluded assets, assumed liabilities and excluded liabilities.
4. Transfer Of Assets - state exactly which assets transfer and when ownership passes.
5. Purchase Price Or Consideration - set out the price, payment date, non-cash consideration or confirmation that no payment is due.
6. Contracts And Consents - list each contract, whether it needs assignment, novation or consent, and who is responsible for obtaining it.
7. Liabilities - say which liabilities the new business accepts and which remain with the old business.
8. Intellectual Property - include the required assignment wording for copyright, trade marks, designs, software and brand assets.
9. Data And Records - deal with business records, customer data, privacy notices and UK GDPR responsibilities.
10. Employees - confirm whether any staff transfer, and whether TUPE may apply.
11. Warranties - include promises about ownership, authority, undisclosed liabilities and the condition of assets.
12. Completion Steps - list what each party must deliver on completion, such as signed consents, passwords, stock lists and handover documents.
13. Post-Completion Help - require practical assistance after completion, such as redirecting customers or signing extra forms.
14. Confidentiality - protect sensitive commercial information shared during the transfer.
15. Governing Law - state that the agreement is governed by the laws of England and Wales, if that's the intended position.

You may need company approvals before signing. Board approval may be required under the company's articles or governance documents. Separately, the Companies Act 2006 can require member approval for certain substantial non-cash asset transactions involving a director or a person connected with a director, subject to statutory thresholds and exceptions. Check the articles of association and any shareholders agreement before committing to the transfer.

What Steps Should You Take Before Signing?

Before signing, you should check the assets, contracts, consents, liabilities and company approvals so the agreement reflects the real deal, not just the idea of the deal.

A sensible process will save you a lot of cleanup later. You don't need to make it painful, but you do need to be thorough.

Step 1: Build An Asset Schedule

Start with a schedule that lists each asset. Include serial numbers for equipment, registration details for trade marks, domain names, software repositories, key contracts, stock quantities and any valuations you're relying on.

Step 2: Check Ownership

Make sure the transferor actually owns the assets. For example, if a freelancer created your logo or software code, check whether your business received a written IP assignment. Paying an invoice doesn't always mean you own the copyright.

Step 3: Review Existing Contracts

Look for restrictions on assignment, novation, subcontracting, change of control and confidentiality. Make a list of customers, suppliers, landlords and lenders who need to consent.

Step 4: Work Out What Happens To Data

If customer, employee or supplier personal data is moving, check whether the receiving business will be a controller, joint controller or processor under the UK GDPR. You may need updated privacy notices, data processing terms or a separate data sharing arrangement.

Step 5: Get Company Approvals And Records Right

Hold any required board or shareholder approvals, keep minutes, and check whether any security interests, finance arrangements or charges are registered at Companies House. If a registered trade mark changes owner, plan the UK IPO update as part of completion.

Step 6: Check Tax And Accounting Treatment

Asset transfers can have VAT, corporation tax, capital allowances, stamp duty or accounting consequences. This isn't something to guess. Get advice from your accountant or tax adviser before completion, especially if the transfer is between connected companies or no money is changing hands.

Key Takeaways

• A direct transfer agreement records the movement of business assets, rights or obligations from one party to another.
• The agreement should clearly list the assets being transferred, the price or consideration, the completion date and any conditions.
• Contracts, leases, finance arrangements, licences and some IP rights may need consent, assignment, novation or registration updates.
• Liabilities should be dealt with expressly so you know what the new business is taking on and what stays behind.
• If employees or personal data are involved, check TUPE and UK GDPR issues before you sign.
• Templates can help you plan, but a lawyer should tailor the agreement to your assets, consents and commercial risks before it's used.

If you'd like help with your asset transfer agreement, contract consents, intellectual property assignments or data transfer arrangements, you can reach us at 08081347754 or team@sprintlaw.co.uk for a free, no-obligations chat.