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The transfer of shares is a method of transferring the beneficial interest in the company from one existing shareholder to another. In private limited companies, the transfer is restricted. We help you to plan and execute the share transfer.
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Transfer of Shares
The ownership right in a company is transferrable subject to restrictions imposed by the AOA of the company or the Companies Act. The process of share transfer is otherwise pretty simple and straight forward. If all parties are available for signature, we can execute the job within the same day.
Play Video about Transfer of Shares of a Private Limited Company | How to Transfer Share | Issue Certificate
- Basic Overview
- List of Documents
- Step Wise Process
Transfer of Shares of a Company
Shares of a company are movable property and thus can be transferred like any other property. A public company can freely transfer its shares, but there are some restrictions on the transfer of shares by a private company. The limits are imposed to protect the rights of investors and shareholders.
Preparation to Initiate Share Transfer
- Check for restrictions in the AOA
- First, offer shares to existing members
- Enter into a Share Transfer Agreement
- If they The transfer of Shares are restrict
- The share transfer form is SH-4 (Sec 56)
Documents Required For Transfer of Shares
Good documentation for the registration of a company plays a vital role & results in faster incorporation. Here is the list of the documents required from the directors and for the company’s registered address for the incorporation of the company. Please submit self-attested copies of documents that are clear and valid.
| S.No | A. Documents of Directors/Shareholder |
|---|---|
1. | Original Share Certificate of share to be transferred |
2. | Certificate of Stamp duty payment (Franking) on issue of share certificate |
3. | Valuation and the share transfer agreement |
4. | Share transfer form duly signed by the parties |
5. | ID and address proof of the transferor and transferee |
6. | Proof of payment of consideration of transfer if any |
Transfer of Share Process
STEP 1 – Notice of Intention to transfer shares
Written notice is submitted to the company by the seller defining his intention to transfer the shares, The existing members of the company are informed and invited to buy the shares.
STEP 2 –Documentation for Transfer of Shares
When the deal to transfer is finalised, and consideration of such transfer is fixed. Form No- SH.4 is filled up by the prospective buyers and the same is signed by transferor and transferee in presence of a witness. The transferor then hands over the share certificate and SH-4 to the transferee. Appropriate stamp duty on share transfer is to be paid by affixing share transfer tickets on the share transfer form.
STEP 3 – Transferor send the Share Transfer Form and Certificate to Company
After the transfer is executed, witnessed and adequately stamped, the transferee sends a request for updating of the register of members with his details in replacement of the transferor details. The company records such transfers.
STEP 4 – Issue of fresh Share Certificate by the company
After the due approval of the board of directors of the company, the share transfer is recorded in the register of transfer of shares and replacement share certificate is issued in the name of the new member of the company.
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