Procedure for Transfer of Shares

 


Transfer of shares is done by companies on regular basis. The Companies Act lays down the provisions related to transfer and transmission of shares of Company.

Transfer of shares is when the title of shares is transferred from one person to another. The person whose shares are getting transferred is called transferor the person to whom the shares are transferred are called transferee. Wherein transmission of shares is done by operation of law in case of death, insolvency, lunacy, inheritance.  

RELATED PROVISIONS

As per Section 56,58 of the Companies Act, 2013 read with Rule 11 of Companies (Share Capital & Debenture) Rules, 2014.

STEPS INVOLVED IN THE SHARE TRANSFER

1.      The transferors and the transferees have to intimate the company their intention to transfer the shares.

2.      Execute an instrument in form SH-4 along with stamp duty .it should be duly singed by both the transferor and transferee, and it should be given to the company within 60 days from date of execution instrument.

3.      Company should check AOA for provisions for transfer of shares.

4.      Board resolution for registration of transfer of shares.

5.      Within 1 month of receipt of Sh-4 company shall issue share certificate to transferee.

WHAT HAPPENS WHEN COMPANY REFUSES TO TRANSFER THE SHARES

1.      When company rejects the transfer then within 30 days of receipt of form SH-4 company shall send refusal notice to both transferor and transfer

2.      If refusal notice is sent then the transferee can appeal to National Company Law Tribunal within 30 days in case of private company and 60 days in case of public company from receipt of refusal notice.

3.      If refusal notice is not sent by the company then private company can appeal to NCLT within 60 days of delivery of SH-4 and in case of public company 90 days of delivery of SH-4.

4.      NCLT after hearing both the parties will either reject the appeal or order the company to register such transfer within 10 days of such order.

CONCLUSION:

If you are looking for compliance support or would like to have more details on Transfer of Shares, please reach out to our product head at vaishali@simplybiz.in or simplycorp@simplybiz.in. We will be happy to help you.

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