TRANSFER OF SHARES
A company issues shares to each of its members which represent that that they hold such part of company and a person/entity holding such shares are known as shareholders. From time to time there are certain situations where an existing shareholder wanted to transfer their shares of respective company to other person/entity.
The provisions for share transfer are governed by section 56 of The Companies Act, 2013 and The Companies (Share Capital and Debentures) Rules, 2014.
What is Share Transfer?
A share transfer is the process of transferring existing shares, its related rights and liabilities from one person to another. A transfer of share can only be transferred for only existing shares and from existing shareholders. Though the transferee can be existing shareholder or not of company.
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Procedure of Share Transfer
- Meeting between transferor and transferee for transfer of shares.
- Execution of Share transfer deed in SH-4 (Format attached) duly executed, signed and stamped by transferor and transferee as per Law.
- Either transferee or transferor will send share transfer deed along with original certificates or letter of allotment of securities (if no certificate is given to shareholder) to the Company at the registered office in case of unlisted Company and to Registrar of Companies (RTA) in case of listed company within a period of sixty days from the date of execution.
- The Company within a period of one month from the date of receipt by the company of the instrument of transfer shall register the transfer and issue the new share certificate to transferee.
- The Company will update its register of members accordingly.
Documents required to transfer the shares
- Original share certificate(s) of transferor
- Self-attested copy of PAN card of Transferor(s) (i.e. sellers) and Transferee(s) (i.e. buyers)
- Pay appropriate stamp duty @0.25% on market value by way of franking or affix share transfer stamps.
- Form SH-4 duly filled and signed.
A company can refuse to transfer the shares in case the above documents are not furnished. Such intimation for refusal along with reason has to be intimated to transferor and transferee within thirty (30) days from the receipt of share transfer deed