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Transfer your shares quickly and affordably. Online Legal India is registered with the MCA (Ministry of Corporate Affairs) & MSME in India. Our experienced professionals (with over 10 years of experience) will draft and complete all necessary documentation on the same day.
Understanding Share Transfer
In India, the ownership of a Private Limited Company is determined by its shareholding. Share transfers occur to allow new investors to join or to transfer ownership of the company.
The various circumstances under which shares in a company may be transferred include:
- Sale of shares
- Gift of shares
- Transmission of shares by operation of law (such as upon the death or bankruptcy of a shareholder)
- Enforcement of a charge over shares
However, the most common method of transfer is through sale.
Shares or debentures are considered 'movable property' and can be transferred according to the Articles of Association of the Company. Thus, a review of the Articles of Association is necessary before initiating the share transfer process. To transfer shares between parties, they must enter into a contract or agreement. The Companies Act covers most aspects of share transfer and transmission.
Understanding Share Transfer
Share transfer is the voluntary act of transferring ownership of shares from one shareholder to another. It involves the intentional transfer of title from the transferor (the one who transfers) to the transferee (the one who receives). During a share transfer, the rights and duties represented by the shares of the company are passed from the shareholder who no longer wishes to be a member of the company to someone who wishes to become a member.
The following individuals are typically involved in the share transfer:
Required Documentation
The transfer of shares can proceed only when all necessary documents are provided promptly, along with their supporting documents. The following documents are essential to initiate the share transfer process:
Original share certificate copy of the transferor
Authenticated copy of PAN cards of the transferor(s) (sellers) and transferee(s) (buyers)
A completed and signed Form SH-4.
Procedure for Share Transfer in a Private Limited Company
To initiate the share transfer process in a private limited company, follow these steps:
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Frequently Asked Questions (FAQs)
A share transfer is the process of transferring existing shares from one person to another.
Ans : A company in default shall pay a penalty of minimum Rs.25,000 and maximum Rs.5,00,000 .
Physical share transfer shall take place only when the shares are not in the dematerialized form.