Procedure to be followed for Transfer of Shares by Foreign Investor to any other Foreign Company
Example
A Ltd (Company Incorporated in India)
B Ltd (A foreign Company holds 100% of A Ltd)
C Ltd (A foreign Company holds 100% of B Ltd i.e the ultimate holding Company of A ltd.
B Ltd has decided to transfer it’s 100% Investment in A Ltd to C Ltd.
Step by Step Procedure to be followed for Such transfer
Step 1. Request Letter by B Ltd to A Ltd
B Ltd shall give a request letter to the A Ltd for approval of transfer of shares by B Ltd to C Ltd.
*Note: Format of request letter has given below as Annexure 1
Step 2. Resolution to be passed by the A Ltd to approve the Transfer.
After receiving the request letter from the B Ltd if the A Ltd is satisfied then a Board Resolution shall be passed by A Ltd for approving the Transfer of the Shares of B Ltd to C Ltd.
*Note: Format of resolution has given below as Annexure 1
Step 3. Duly Notarized Copy of the resolution from B Ltd along with duly executed Copy of the transfer Deed.
The B Ltd shall give a duly notarized Copy of the resolution of the meeting in which decision has take to transfer of its investment in A Ltd by the B Ltd to the C Ltd along with the duly executed Share transfer Deed (Form SH-4) to the A Ltd.
Step 4. Proper Stamp duty on the Transfer of shares
Proper Stamp duty shall be paid on the share transfer, the stamp duty shall be calculated on the current Market Value of the shares.
Step 5. Endorsement of share certificate
After receiving of all documents from the B Ltd, the A Ltd shall record the same and A Ltd shall endorsed the name of the transferee i.e C Ltd on the back of the share Certificate.
Annexure 1
Draft Format of Request letter for Transfer of Shares
On the letter head of the Company
To,
The Board of Directors
……..……………………….
……………………………..
Subject : Request for transfer of 100 Equity Shares
Ref: Folio No. : ………………….
Dear Sir/ Madam,
I, ………….., shareholder of M/s. ……………. Private Limited having Folio No………….., holding …….. Equity Shares of Rs. 10/- each, request you to transfer my ………. Equity Shares held in the Company for a total consideration of …………../- (Rupees Thousand only) bearing distinctive no. …………. to Ms. Richa Singh.
Please do the needful.
Name ………………
Address…………………
Folio No
Annexure 2
Draft Board Resolution for approving transfer of shares.
CERTIFIED TRUE COPY OF THE RESOLUTION PASSED AT THE MEETING OF BOARD OF DIRECTORS OF THE COMPANY HELD ON ……………, ………TH DAY OF …………., 2020 AT THE REGISTERED OFFICE OF THE COMPANY
“RESOLVED THAT pursuant to the provisions of Section 56 read with Rule 11 of the Companies (Share Capital and Debentures) Rules, 2014 (including any statutory modifications or re-enactment thereof, for the time being in force) other applicable provision, if any, of the Companies Act, 2013 and the Articles of Association of the Company, the consent of the Board of Directors of the Company be and is hereby accorded to register the transfer of the below mentioned shares in favour of the transferee(s):-
| S.No. | Certificate No. | Distinctve No. | No. of Shares | Name of the Shareholder | Name of the Transferee | |
| From | To | |||||
| 1. | – | – | – | – | – | – |
“RESOLVED FURTHER THAT any of the Directors of the Company be and are hereby severally authorized to authenticate the said share transfer and to sign and endorse the share certificate in favour of the transferee and to do all acts incidental and ancillary to give effect the said transfer for and on behalf of the Company.”
CERTIFIED TRUE COPY
For ——————————-
Director
Author Bio
How do we know the amount of stamp duty paid in case of transfer
Stamp duty will be 0.15% (15 paise per 100 Rupees) of Total transfer price (not on the face value)