Applicable Statutory Provisions Related to Transfer of Share
- Section 56 of Companies Act, 2013
- Rule 11 of Companies (Share Capital & Debentures) Rules 2014
- Provisions given in model articles of association given in Table ‘F’ of Schedule-I
STEP -1
- Private Limited Company’s articles of association must be checked.
STEP -2
- The shareholder will give the Company a written notice of intent to transfer the company’s share.
STEP -3
- Determine the price according to the Articles of Association, where the company’s shares would be sold first to its current shareholders.
- This price is usually decided by the Company Directors or by the Company Auditor.
STEP -4
- The company will then inform the other shareholders of the share availability and the final date of purchase of the stock.
- If any of the current shareholders are coming forward to purchase shares, they must be allocated these shares.
- When no existing shareholder is interested in, or excess shares are available, the same could be transferred to the external partner.
STEP -5
- Get the SH-4 Share transfer act duly executed by both the transferor and transferee.
STEP -6
- In compliance with the Indian Stamp Act and the Stamp Duty Notice in effect in the State in question, the transfer certificate will bear stamps.
- The official share transfer rate is 25 Paise, for every 100 rupees of the share value or part thereof.
STEP -7
- A person who gives his or her signature, name, and address must bear witness to the signatures of the transferor and the transferor of a share transfer deed.
STEP -8
- Change the corresponding share certificate or allocation letter to the share transfer deed and forward it to the company.
- A share transfer deed must be deposited with the company, in or on behalf of the customer, within sixty (60) days of the date of execution, and in or on behalf of the customer.
STEP -9
- The Board shall consider the same after receiving the share transfer deed.
- If the share transfer documentation is in order, the Board shall register the transfer by resolution.
In following situations and under the subsequent time limits, the company shall issue certificates to all securities allocated/transferred/transmitted: –
| For memorandum subscribers – | within 2 months of the date of incorporation. |
| In the event of allocating all the shares- | within 2 months of the allocation date, |
| Delivery of the Transfer/Intimation Transmission Instrument by the client- | within 1 month from the delivery date. |
| Allocation of debenture – | within 6 months of the allocation date. |
Non-Compliances
| If any depository or depository participant, with an intention to defraud a person, has transferred shares, | It shall be liable under section 447. |
| In case, the company and every officer of the company is in default: | Liable to a penalty of fifty thousand rupees. |