Section 56 of the Companies Act, 2013 requires execution of a proper instrument of transfer for transfer of interest of a member in a company not having share capital. The instrument must be executed by or on behalf of both the transferor and transferee and delivered to the company. Rule 11 of the Companies (Share Capital and Debentures) Rules, 2014 prescribes Form SH-4 for transfer of securities held in physical form. Rule 11(2) further clarifies that the same form is also applicable for transfer of interest of a member in a company not having share capital, and references to securities are to be read as references to member interest. Stakeholders have accordingly been advised to use Form SH-4 for transfer of member interest in companies limited by guarantee.
Please refer below clarification issued by MCA
What procedure is to be followed in case of transfer of interest of a member in a company not having share capital?
Ans. Section 56 of the Companies Act, 2013 provides that a proper instrument of transfer is required to be executed in case of transfer of the interest of a member in case of a company having no share capital. Such instrument is required to be executed by or on behalf of the transferor and the transferee and must be delivered to the company in terms of the said provision.
Rule 11 of the Companies (Share Capital and Debentures) Rules, 2014 provides that form SH-4 shall be the format for transfer of securities held in the physical form. Rule 11(2) of the said rules clarifies that the same form is also required to be used in case of transfer of interest of a member in a company not having Share capital. The said provision clarifies that the reference to securities shall be read as reference to interest of the member of the company.
Accordingly, stakeholders are advised to use form SH-4 for transfer of interest of member in case of a company limited with guarantee in terms of rule 11(2).
