Transfer of Shares
he shareholders are the owners of a company limited by shares who are vested with wide powers of controlling the Company like appointment and removal of Directors, approval for bringing additional funds and the approval of related party transactions etc.Transfer of ownership of a company can therefore be affected by transferring the shares held by one member to another. Share transfer in a Private Limited Company is usually more restricted in compared to a Public Limited Company.
Transfer of ownership of a company can therefore be affected by transferring the shares held by one member to another. Share transfer in a Private Limited Company is usually more restricted in compared to a Public Limited Company. In case of Private Limited Company, the shares are closely held by either a small group of persons, family members or friends, etc. Hence, most of the Articles of Association of a Private Limited Company limit the right of a shareholder to transfer the company's shares to an outsider.
TRANSFER OF SHARES
BASIC INFORMATION
The shareholders are the owners of a company limited by shares who are vested with wide powers of controlling the Company like appointment and removal of Directors, approval for bringing additional funds and the approval of related party transactions etc.
Transfer of ownership of a company can therefore be affected by transferring the shares held by one member to another. Share transfer in a Private Limited Company is usually more restricted in compared to a Public Limited Company. In case of Private Limited Company, the shares are closely held by either a small group of persons, family members or friends, etc. Hence, most of the Articles of Association of a Private Limited Company limit the right of a shareholder to transfer the company's shares to an outsider. Therefore, it is important to check the provisions of the Articles of Association of the Company prior to affecting a share transfer to understand additional compliances, if any.
What will you receive in Share Transfer package ?
- Endorsem*nt on the Share Certificate
- Duly Executed Share Transfer form / instrument
- Revenue stamps Payment
- Board Resolution for share transfer
- Easy exit from the ownership of the Company
- Split facility for easy transfer while keeping your ownership intact.
What are the Types of shares are there in the Company ?
There are mainly two types of share capital in the Company:
- 1. Equity Shares which are also known as owners capital
- 2. Preference share capital which are based on preference of rights over the equity share holders.
What is the process for transfer of share in Company ?
Step 1:Fill up and execute the share transfer form in Form SH-4
Step 2:Pay the stamp duty on the form SH-4 by affixing the share transfer Stamps of 0.25% of the total consideration amount involved in the share transfer
Step 3:Deliver the SH-4 at the registered office of the Company
Step 4:Pass theBoard Resolution for approval of share transfer
Step 5:Make necessary entries in the register of Members and register of share transfer
Step 6:Make necessary endorsem*nt at the back of share certificate and handover the same to the transferee.
The entire process for registration of Company will take at least 2 to 4 working days.
What Documents are required for share transfer ?
- Income Tax PAN of both the transferee and the transferor
- Passport size colour Photo of both the transferee and the transferor
- Aadhaar CardorElectricity BillorPassportorDriving LicenseorVoter ID Card of both the transferee and the transferor
- Original Share Certificates of the Transferor
What can be the reasons for the transfer of shares ?
- Dilution of control over the affairs of the Company
- As per the management agreement, if entered between the members of the Company
- to part the total shareholding in favour of any person as business deal
How LeglaRaj will help with Share Transfer Process ?
understanding of requirements:
Our team will be conducting the review of the assignment and accordingly expert guidance will be provided with a professional approach towards the matter of transfer of shares interse or to the third party as the case may be.
Documentation
After going through your requirements we will prepare the documents relating to the share transfer and make necessary noting and entry in the statutory registers maintained by the Company.
Issuance of share certificates:
After all the formalities and processes are completed, our expert will arrange for issuance of share certificates duly endorsed on the back side to the transferee in 5 - 10 working days.
As an expert in corporate governance and legal procedures related to business ownership, I bring a wealth of experience and knowledge in the field of transfer of shares. My expertise is grounded in a comprehensive understanding of company structures, legal frameworks, and the intricate details involved in the transfer of ownership within a corporate entity.
In the realm of share transfers, it is imperative to recognize the pivotal role shareholders play as the owners of a company limited by shares. Their powers extend to crucial decisions such as the appointment and removal of directors, approval for additional funds, and oversight of related party transactions. The focus of my expertise lies in elucidating the intricacies surrounding the transfer of shares, particularly in the context of Private Limited Companies.
Private Limited Companies, by nature, exhibit more restricted share transfer processes compared to their Public Limited counterparts. This limitation arises due to the closely held nature of shares within a Private Limited Company, often owned by a small group of individuals such as family members or friends. This characteristic prompts most Articles of Association in Private Limited Companies to impose restrictions on shareholders transferring shares to outsiders.
To navigate this complexity, individuals involved in share transfers must thoroughly examine the provisions outlined in the Articles of Association of the company. These provisions dictate the extent of shareholder rights and potential compliances associated with share transfers.
The article touches upon several key concepts related to share transfers, encompassing both the fundamental principles and procedural steps involved. These concepts include:
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Types of Shares: The distinction between Equity Shares (owner's capital) and Preference Share Capital, each with its unique rights and characteristics.
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Share Transfer Process: A step-by-step guide, from filling and executing the share transfer form to board resolutions, stamp duty payments, and the necessary entries in registers.
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Documents Required for Share Transfer: Essential documentation such as PAN, photos, and identification documents for both the transferor and transferee, as well as original share certificates.
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Reasons for Share Transfer: Potential motivations for transferring shares, including dilution of control and management agreements.
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LegalRaj's Role in the Share Transfer Process: The article mentions how LegalRaj, as an expert in legal matters, facilitates the share transfer process by understanding client requirements, preparing necessary documents, and ensuring the issuance of endorsed share certificates.
In summary, my expertise lies in providing comprehensive insights into the intricate world of share transfers, covering legal considerations, procedural steps, and the broader context of corporate governance.
