What is meant by transfer of shares ?
As we all know that shares are the property which can be freely transferable and movable property but there are some provisions which need to be complied for an effective transfer of shares. Transfer of shares in the public company are always freely transferable, but the transfer of shares in private companies have some restrictions, which we need to discuss about. The procedure for transfer of shares has been mentioned in the Section 56 of the Companies Act, 2013.
Time limit for issuing share certificate
A company is bound to give the share certificate to the new owner within 1 month from the date of instrument of transfer being received by the company unless otherwise restrictions applicable to the company.
Stamp Duty on transfer of shares
Stamp duty liability arises when there is transfer of shares from one person to another. The liability of stamp duty payable is on the seller of the shares. The seller has to pay an amount equivalent to Rs. 0.25 per 100 shares transferred. This may change from time to time, you may refer to current rates. The only case when stamp duty liability does not arise is when shares are transferred from a person to depository or from depository to any other beneficial person.
Transfer deed:
Transfer deed or any other document which may denote the transfer of shares is must in case of transfer of shares. Without this document the transfer procedure cannot be processed.
Instrument for transfer:
Form SH.4, which is an instrument for transfer needs to be delivered to the company within 60 days from the date of such execution
Restriction over transfer of shares:
Private limited companies are restricted by the articles of association for restriction as they are mainly issued to the family members.
Refusal for transfer:
Company may refuse the seller to sell or transfer the shares from 30 days from the day on which instrument of transfer was filled.
Appeal against refusal:
Seller may appeal against the company where company has refused his proposal for transfer of shares, within 60 days from the date of such refusal order.
Procedure for transfer of shares:
Step 1. Seller should give notice to the company for his intention to transfer the shares.Step 2. Now company would notify his members about the transfer offer, if no member is interested in buying it than only transfer would be processed.Step 3. Now if transfer is to processed than prepare form SH-4 duly signed by both the seller and the buyer and should be stamped and should be handed over to the company.Step 4. This share transfer deed should be witnessed by any person and should be signed by that person along with name and address.Step 5. The last step is to attach the share certificate or allotment letter whichever is available and deliver the same to the company within 60 days from the date of execution.Step 6. After receiving the documents, board would verify the same and issue the new certificate by passing a resolution.
Disclaimer :-
This notes has been Hand Written by the author. Any Information or any suggestion given in the notes are only from personal opinion and do not create any liability on the part of author. The author has exclusive rights over the documents. If any one found copying it will be liable for Legal Action. Recommended Articles
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