Transfer of Shares

Overview

Share transfer means willingly handing over of the rights and possible duties of a member from a shareholder who does not want to continue as a shareholder of the company to a person who wants to be a shareholder of such company. Shares of the company are easily transferable in the manner provided in the articles of the company.

Time Limit to Register Transfer of Shares

As per the Companies Act, 2013 transfer of shares shall be registered with the company within a period of 60 days from the date of execution of transfer deed/ instrument. And the company shall issue certificate of shares to the transferee within one month from the date of receipt of transfer instrument.

Procedure of Transfer of Shares

• STEP-1: Execution of Transfer Deed: The very first step in the transfer of shares is execution of transfer deed/ instrument between transferor and transferee in SH-4 form. This form should be duly stamped.
• STEP-2: Delivery of transfer deed to the company: The transferor or transferee of shares shall deliver the transfer deed/ instrument in form SH-4 along with the relevant certificates of shares with the company within 60 days of execution of deed.
• STEP-3: Board Meeting: Once company receive share transfer deed it will conduct the meeting of board to check the deed and documents and check whether stamp is duly affixed on the transfer deed or not. After satisfaction pass resolution for the approval of transfer of shares and authorizing person to do acts and deeds in this respect.
• STEP-4: Notice by the company: When application for registration of partly paid-up shares is filed by transferor alone then company shall issue notice in form SH-5 to the transferee to give “No objection” to transfer within 2 weeks from the date of receipt of the notice.
• STEP-5: Issue of share certificate: The company shall within one month of receipt of transfer deed issue share certificate in favour of the transferee and shall enter the name of transferee in the register of members of the company.

Particulars of Transfer Deed (SH-4)

• Name of the company.
• Nominal value of shares and amount called up and paid up on shares.
• Number of shares transferred with share certificate number.
• Details of transferor.v
• Date of execution of deed.
• Details of transferee such as name, address, E-mail ID, father’s name and occupation.

Penal Provision for Company

When company register transfer of shares which is not in accordance with the section 56 of the Companies Act, 2013 then:

• Company shall be punishable with the fine of at least Rs.25000 which extend up to Rs. 5 lakh.
• Officer of company who is in default shall be punishable with the fine of at least Rs.10000 which extend up to Rs. 1 lakh.