Transfer of Shares Procedure

The Share Transfer is the Process of sharing the shares from one Person to the another. The transfer of shares in a private limited company differs from that of the Public limited company. Section 56 of the Companies Act,2013 comprises of the transfer and transmission of Securities of a company.

According to the section 56(1) of the Companies Act, 2013, a company cannot register a transfer of shares of the company until a proper instrument of transfer is stamped, dated and executed on behalf of the transferor.

The Transfer of securities held in physical form can be started by executing the instrument of transfer by the form no. SH-4 or Security transfer form, with the date of its execution, specified and should be delivered to the company 60 days from the date of such execution.

• Meaning
• Stamp Duty in the Transfer of share
• Value determination of shares
• The procedure of transfer of shares
• Time Limitation

Meaning:

The Transfer of shares differ from the Transmission of shares and it can be explained as follows,

A Transfer of share is transferring the title of share voluntarily from one person to another, whereas, Transmission of share is the transferring the title of share from one person to another by law due to death, succession, inheritance, bankruptcy, etc.

In case of Transfer of share, it has a stamp duty which one required to pay, whereas in case of transmission of shares there is no need for stamp duty.

Stamp Duty in the Transfer of share:

If the Transfer of shares is lodged with the company, it should be duly signed and the transfer of shares attracts stamp duty under the Indian Stamp Act, 1899. The stamp duty can be levied only by the Central Government on share Transfer.

According to section 56(1), of a company Act, a company cannot Register the transfer of securities until a proper instrument of transfer is duly stamped, dated and executed on behalf of the transferor and the transferee must be delivered to the company along with the certificate related to the securities in question.

The Transferor (seller) of the shares must pay the duty stamp at the rate of Twenty-five paise for consideration of Rs.100 or part thereof is payable.

As per Section 8A od the Indian Stamp Act, 1899, the Electronic share transfer form is provided, and a person can pay stamp duty on the total amount of issuing the securities.

Value Determination of shares:

The share price of is easy to find in case of the listed company as they are easily available on the stock exchange. Whereas, it is difficult to find the price of the shares of a Private limited company.

The determination of the share value for the purpose of stamp duty is done based on average share market value at the time of transfer or by agreeing the price between the seller and the buyer of the shares, whichever is higher.

Procedure of Transfer of Shares:

The Seller of the shares must give notice to the company in writing about his intent to transfer of shares in a private limited company

After receiving the intension letter from the seller, the company will send a notice to its members about the availability of shares for purchase.

Further, the company must state the price of such share and the Time limit in which the members should tell whether they are interested to buy the shares.

If none of the members shows interest in buying the shares the company can transfer the shares to the outsiders, to which the company cannot object.

If a member is interested in buying the share, then he must fill the Transfer Deed.

The member should duly execute the form of transfer of shares in the company on behalf of the transferor. On account of execution, the deed should be duly stamped, valued, dated and cancelled.

The company issues the share certificate or the allotment letter

This share certificate should be attached with the deed and should be sent to the company within 60 days from the date of execution either by the transferor or Transferee of the shares

Finally, the share transfer Agreement and the executive share agreement may regulate the relationship between the shareholders.

Time Limitation:

The company shall not register the transfer of securities of the company or members without a proper instrument of transfer within a period of 60 days from the date of execution.

The transfer should not be registered unless the company gives notice of the application to transferor and transferee must give no objection certificate within 2 weeks from receipt of the notice.

The company shall not deliver the certificate of shares if the allotment of any of the shares done within a period of 2 months from the allotment date.

Meaning:

Stamp Duty in the Transfer of share:

Value Determination of shares:

Procedure of Transfer of Shares:

Time Limitation:

Head Office :- Kodambakkam

Branch Office :- Tambaram

Branch Office :- Nagercoil

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Welcome to ARAMA

Meaning:

Stamp Duty in the Transfer of share:

Value Determination of shares:

Procedure of Transfer of Shares:

Time Limitation:

Head Office :- Kodambakkam

Branch Office :- Tambaram

Branch Office :- Nagercoil

Our Office Hours