Share transfer from one person to another person or one person to many or many to one person.
Share transfer from one party to another, wherein transferor or transferee is a corporate entity.
Ownership of a Private Limited Company in India is determined by owning shares in the Company. In order to attract new investors or transfer company ownership company shares need to be transferred. Company interest may be sold to attract new investors or to pass corporate controls.
An important feature of a company is that shares can be transferred. Shares or loans are movable property, transferred as provided by the company’s records, particularly shares of any members of a public company.
Stock transfers are only possible through a contract or arrangement between two or more persons. The provisions of the Companies Act deal primarily with the transfer and transfer of securities. Transfer of mortgages due to death, succession, inheritance, extinction, etc. The transfer of collateral can take place through any contract or arrangement between two or more persons. The provisions of the Companies Act deal with the transfer and transfer of securities.
Transfer of securities means the loss of the title of these securities due to death, succession, inheritance, decay, etc.
What is share transfer?
A transfer of shares means the voluntary transfer of the rights and duties of a company member. The rights and duties of a transfer of shares resonate with the shareholder who wishes to cease to be a member of the company to the person who intends to become a member of the company.
The shares of the company are therefore transferred as with any other movable property except the limits stated under the Company Articles.
Who is involved in Share transfer?
- Subscribers to the memorandum
- The legal representative in the case of the deceased
- Company (Whether listed or unlisted)
The process of transferring shares of Private Limited Company
There are certain restrictions on the transfer of shares of a company. At the company’s boundaries the following procedure must be followed to transfer shares:
- Initially, it is necessary to obtain a transfer title deed as required in the prescribed format
- This statement needs to be duly signed by the transferor and the transferor.
- Stamp this transfer of title deed by name, address, and signature.
- The transfer document or distribution letter must be attached to the stock certificate and sent to the company
- The company must process the paperwork and the transferor must be issued with a new certificate in the event of receipt.
- The transferor will ask the company to transfer his shares.
- A notice will be sent by the company to all members present that the above-mentioned shareholder has indicated the intention to transfer the shares.
- In the event that no existing member has shown interest in the company then the company will inform the transferor that he or she may sell his or her shares to a non-member.
The transferor will then transfer the shares through the following process:
Form SH-4: This is the most important tool for transferring a process. The transferor will be required to send the properly signed SH4, dated, and stamped to the company. SH4 contains the following information:
- Date of execution
- Company CIN
- Company Name
- Bonds class
- Normal price / Amount charged / Amount paid on securities.
- Bonds to be transferred with consideration or Rs … Different number of shares, certificate no.
- Transferer’s name and his Folio number, Signature. The same must be proved.
- Transfer name and details such as father’s name, address, email id, job, Folio, Signature.
- The transfer tool must be properly sealed in accordance with the Indian Stamp Law in 1899.
- Once all the details have been sent the same company will see that everything is ready and will register the same. A share certificate is issued and approved, to the transfer within one month of receiving the Transfer Tool.
Transfer of share by Physical mode
Stock ownership can be transferred through the delivery of assets but there is a contractual relationship between members and the company. In the event of a stock transfer, the transfer tool is required. Transferring shares is a long process that begins with a sale agreement and ends with the deed of transfer and finally the registration of the transfer.
The transferor must use the transfer title deed as a tool. This transfer title deed must be duly signed and submitted to the Company together with a certificate accompanying the transferable shares. The Company will not accept any illegal transfer tool with these provisions. In visual mode, transfers must be made on Form SH 4.
Sometimes companies send the consent of the tool to the transferor who submitted the transfer to the company before reviewing the documents. This notice comes in the form of a checklist for processing transcripts. Some companies also issue transfer receipts. In the event that a transfer request is made by the transferor and payment of the company’s shares is partially made, the company should not object to the transfer within 2 weeks from receipt of the issued notice. The company is not legally obliged to give the transferor notice when the transfer of documents is filed by the transferor.
Receipts must be checked on all transfer documents to ensure that all documents are available. If the transfer of documents is not accepted they must be returned to the transferor. Also, in case the transferor’s signature differs from the transfer tool and the signature on the company record then the documents will be returned.
The Board of Directors or committee must approve all transfers. Registration only takes place after approval. The appropriate authority is required to approve it if everything is approved after the inspection and the transfer of shares must be approved by the board. In the case of Articles of Associations, the company gives the board the power to delegate the power to authorize the transfer of shares that it can transfer to another committee that does not include directors of the company.
Any assignment transfers are incomplete without registration of transfer assignments. A share transfer form is a document in which the transferor agrees to accept the shares. This becomes a legal contract with the company. Once the company has approved and registered the transferer’s name it is registered and qualifies as a member of the company. Keeping a transfer register is not a legal requirement.
Delivery Certificate of Sharing
The transfer applies only to the registration of such shares by the company. The company must submit a share certificate within 1 month from receipt of the company’s instrument associated with the transfer. The transfer tool must be authorized by the appropriate name of the transferor.
Step: 1 – Businesses with large budget funds: The Company should not (within 60 days be done) register any share transfer or ownership interest to any owners who are profitable with the appropriate tools.
Step: 2 – Transfer request: Transfer should not be registered until the company notifies the transferor within 2 weeks of receipt of receipt.
Step: 3 – There is no certificate of opposition: In the following cases the following timelines should be followed
- For memorandum subscribers – Within 2 months from the date of registration.
- Allocate all company shares – within 2 months from the date of allocation.
- Loan allocation within 6 months from the date of disbursement.
Company – Minimum penalty of Rs.25, 000 and maximum Rs.5, 00,000.
In the wrong case – The minimum amount charged by an official in error is Rs.10, 000 and the limit is Rs.1, 00,000.
Frequently Asked Questions
The transfer of shares is a voluntary transfer and the duties of a company member.
The people involved in the transfer of shares are: Registered Memorandum Legal Representative in the event of the death of the Transferor Transferee Company (Whether listed / unlisted)
The company fine is a minimum failure of Rs.25, 000 and a maximum value of Rs.5, 00,000.