Transfer of share is restricted by the articles of association of a private limited company, the shares to be transferred first offered to the existing members of the company, and only in case the same is not accepted by the existing members, it can be transferred to some other person. The entire process of share transfer is little complicated given stringent provisions of the company law and applicability of state stamp act which differs from state to state. We are experienced to handle the share transfer work.
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TRANSFER OF SHARES OF A PRIVATE LIMITED COMPANY
Transfer of shares refers to the transfer of ownership. Shares of a company are movable property and thus can be transferred like any other property. In other words, when an existing shareholder transfers the issued shares to the other person who is registered as the holder of those shares, the process can be termed as transfer of shares. A public company can freely transfer its shares, but there are some restrictions on the transfer of shares by a private company. The limits are imposed to protect the rights of investors and shareholders. Section 56 of the Companies Act, 2013 mandates that a company shall register a transfer of securities of the company only when there is a proper instrument of transfer as per the format laid down in Form No SH. 4. The section 56 also states that if a company has no share capital, it cannot register a transfer of securities of the company, or the interest of a member of the company.
Stepwise Process for Transfer of Share
STEP-1: Notice of Intention to transfer shares.
Written notice is submitted to the company by the seller defining his intention to transfer the shares, The existing members of the company are informed and invited to buy the shares
STEP-2: Documentation for Transfer of Shares
When the deal to transfer is finalized, and consideration of such transfer is fixed. Form No- SH.4 is filled up by the prospective buyers and the same is signed by transferor and transferee in presence of a witness. The transferor then hands over the share certificate and SH-4 to the transferee. Appropriate stamp duty on share transfer is to be paid by affixing share transfer tickets on the share transfer form.
STEP-3: Transferor send the Share Transfer Form and Certificate to Company
After the transfer is executed, witnessed and adequately stamped, the transferee sends a request for updating of the register of members with his details in replacement of the transferor details. The company records such transfers.
STEP-4: Issue of fresh Share Certificate by the Company
After the due approval of the board of directors of the company, the share transfer is recorded in the register of transfer of shares and replacement share certificate is issued in the name of the new member of the company.
LIST OF DOCUMENTS REQUIRED FOR TRANSFER OF SHARES
Original Share Certificate of share to be transferred
Certificate of Stamp duty payment (Franking) on issue of share certificate
Valuation and the share transfer agreement
Share transfer form duly signed by the parties
ID and address proof of the transferor and transferee
Proof of payment of consideration of transfer if any