Share Transfer

The shares of any member of a public company. A Private Limited Company in India decides by the shareholdings of the Company. The transfer of the securities is possible through arrangements or contract between two persons.

To transfer the ownership of the Company the share of the company should be transferred. To attract new investors of the company the company’s interest could be sold. According to the provision of the Companies Act crucial deals with the share transfer and transmission of the securities. The transmission of securities defines as the loss of title, death, bankruptcy etc…

What is share transfer?

Handling the rights and duties of a company member voluntarily defines as Transfer of shares. These share transfer happens when the shareholder wishing not to be a member of the company further to a person who is wishing to be a member of a company.

Who is involved in Share transfer?

• Subscribers to the memorandum
• The legal representative in the case of a deceased
• Transferor
• Transferee
• Company (Whether listed or unlisted)

Procedure to transfer the shares of Private Limited Company

The transferring of the shares of the Private limited Company has certain restrictions .so there are some steps that should be followed to transfer the shares.

1. Share transfer deed is to be obtained firstly.
2. The transferee and the transferor both should sign this deed.
3. After sign stamp with his/her name, address and signature is kept on transfer of share transfer deed.
4. The transfer documents must be attached to the share certificate and should be sent to the company.
5. Then after the company will start the paperwork and the transferor will grant a new certificate if in case it is accepted.
6. Transferor will make a request to the company for transferring the shares.
7. A notice will be sent to all the existing members of the company that the above-mentioned shareholders has shows the intension to transfer the shares.
8. If there is no member in the company who shows the interest then the intimation by the company is given to the transferor that he can sell his shares to a non-member.

If the shares sell to the non-member the following procedure take place

Form SH-4:

The SH4 contains the following information:• Execution date
• CIN of the company
• Name of the Company
• Class of the securities
• Nominal value/ Amount called up/ Amount paid up of the securities.
• The securities that are to be transferred at a consideration or Rs… Distinctive no. of shares, certificate no.
• Name of the transferor along with his Folio No, Signature. Also the same should be witnessed.
• Name of the transferee along with the details like Father’s name, address, Email id, occupation, Folio, Signature.
• The instrument of the transfer should be duly stamped as per the Indian Stamp Act. of 1899.
• Once all the details are submitted then the same company will see if everything is in place and will register the same. Within one month a share certificate is issued and endorsed, to the transferee of the receipt of the Instrument of Transfer.

Transfer of share by Physical mode

In general transfer of share is the intentional transferor title of share between the transferor and the transferee. In public company the shares are easily transferable until a valid reason to disallow. Transfer of the shares in physical mode discontinued with the effect from April 1,2019.transfer of the share take place a long process were one should sell and then there should be an execution of the deed of transfer and then finally registration is done.

Transfer Deed

When a person sells a property to the other person, in between the selling and receiving process a sales deed is executed between both persons this deed is defined as transfer deed. These transfer deed is duly signed and then send to the company along with the certificate which is relevant to the shares that are transferred. If there is any issue in an instrument of the shares the company will not accepts. Form SH4 is executed in the transfer of physical mode.

Scrutiny

A scrutiny must be carefully done on the receipts of all the documents of transfer to ensure that all the documents are in exact place. The transfer of the documents in some cases are not acceptable then they should be returned to transferee, in some cases the signature of the transferor in the company’s record is different from the signature on the transfer instrument in that case also the documents will be returned .

Approval

The every transfer of the shares are approved by the committee or the Board of Directors, after approval only the registration takes place. Everything is accepted and approved by the right authority after the scrutiny and transfer of shares are allowed by the board.In case of Articles of Associations of the company is empowering the board to delegate the power of approval of share transfer that it may also delegate it to another committee which is not including the directors of the company

Registration

If the registration is not done then any share transfer is incomplete. by the documents of the share transfer the transferee will accepts and agree the shares, then this will become a legal contract to the company. Once the company approves the transferee s shares then they register the transferee’s name in the registry and he/she will become a member of a company.

Delivery of Share Certificate

As per the provisions, once the share certificate is issued that to be delivered within the period of two months from that of allotment date. With the name of the transferee the instrument of the transfer should be endorsed.