Share Transfer

A private limited company is deemed to be a “closed corporation” of members. The transfer of shares in a Private Limited Company can be restricted by its Articles of Association (AOA). Hence, you must review the Articles of Association of the Company before starting the share transfer process.

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Share Transfer required mandatory

Benefits of Share Transfer

The benefits of equity share investment are pay entitlement, capital increment, limited liability, control, right shares, demand over earnings and assets, liquidity, bonus shares, etc.
You can lower your tax bill
Further, you will be the owner of the growing business
You will be aligned with the new private equity buyer

Pricing

(Simple & Clear Pricing. No Hidden Charges)

Government Fee	Rs 0
Professional Fees	Rs 1,459
Goods & Service Tax	Rs 00
Total Cost	Rs 1459

What is Share transfer?

(All you need to know)

Transfer of shares means handing the rights and possibly the duties of a company member voluntarily. The rights and the duties of the share transfer happen from the shareholder who is wishing to not be a member of the company anymore to a person who is willing to be a member of the company.

Thus the shares in a company are transferable like any other movable property in the absence of the expressed restrictions under the Articles of the Company.

Who is involved in Share transfer?

1. Subscribers to the memorandum

2. Transferor

3. Transferee

4. Company (Whether listed or unlisted)

Checklist for Transfer of Shares

Declaration of notice in drafting for his purpose to transfer his share to the organisation.
Get the share transfer agreement in form SH-4 duly performed by both the transferee and the transferor. Form SH-4 should be properly marked and recorded.
The period for the security of devices for transfer with the firm should be notified.
Amount of share transfer stamps to be attached on the transfer agreement
Share certificate or document and letter of distribution
Board resolution and Delegation of authority
Distribution of the share certificate of transfer

Transfer of share by Physical mode

The ownership of the shares can be transferred by the delivery of the possession but there is a contractual relationship between the members and the company. When the transfer of the shares happens an instrument of transfer is required. Transferring the shares is a long procedure that starts with the agreement to sell and there is an execution of the deed of transfer and finally the registration of the transfer.

Transfer Deed

The transferor transferee should execute the share transfer deed as an instrument. This share transfer deed is to be duly signed and delivered to the Company along with the certificate that is relevant to the shares that are transferred. The company will not accept any instrument of the transfer which is not in confirmation with these provisions. In the physical mode, the transfer should be executed in Form SH4.

Acknowledgement

At times the companies send an acknowledgment of the instrument to the transferor who has lodged a transfer with the company before scrutinizing the documents. This notice comes in the form of a letter that has a checklist for the scrutiny of the transfer documents. Some companies also issue transfer receipts. In case the transfer application is made by the transferor and payment for the shares of the company are partly made then the company should not have any objection to transferring the shares within 2 weeks from the receipt of the issued notice. The company is not statutorily obliged to give the notice to the transferor when the transfer of the documents is lodged by the transferee.

Scrutiny

A scrutiny should be done on the receipts of all the transfer documents to endure that all the documents are in place. If the transfer of the documents is not acceptable then they should be returned to the transferee. Also, in case if the signature of the transferor is different in the transfer instrument and the signature in the company's record then the documents will be returned.

Approval

The Board of Directors or the committee has to approve every transfer of the shares. The registration happens only after the approval. The right authority is required to approve it if everything is accepted after the scrutiny and the transfer of shares must be allowed by the board. In the case of the Articles of Associations of the company is empowering the board to delegate the power of approval of share transfer that it may also delegate it to another committee which is not including the directors of the company.

Delivery of Share Certificate

The transfer is effective only on the registration of such shares by the company. The company has to deliver the share certificate within 1 month from the receipt by the company's instrument that is relevant to the transfer. The instrument of the transfer should be endorsed with the respective name of the transferee.

Frequently Asked Questions

Can you exchange shares of a private company?

Trading stock in a private company is not as easy as trading stock in a public business. Investors or employees can trade the shares through an agent if they own shares of a public company. A private property sale must be confirmed by the group that published the shares.

How to sell or trade shares?

You can trade shares by discussing it to an agent or through a DIY funding platform. The value of selling shares varies based on the platform or an agent you are using. Additionally, you can trade your shares online, or in the state of paper certificates, on the phone or by post.

Can I sell my shares from one Demat account to another?

You have two ways to sell your shares from one Demat to another Demat account. To sell shares automatically, you can request the delivery instruction slip from the agent. Then, you can have your shares once you fill the form. Then, you can submit that to the agent whom you want to sell the shares.

How much time is needed for Transfer of Shares?

Transfer of Shares usually takes 1-2working days subject to the approval of the Central Govt. and the receipt of documents from the clients.

Will I get any proof or evidence for Transfer of Shares?

Yes. The Share Certificate of the transferors will be endorsed on the back side with the transfer details such as Folio No. of the transferee, no. of shares held and the signature of Company Officer, etc. will be handed over to the transferee to whom the shares have been transferred.