A company, abbreviated as co., is a legal entity representing an association of people, whether natural, legal or a mixture of both, with a specific objective. Company members share a common purpose and unite to achieve specific, declared goals. In India, a Company means “company” means a company incorporated under this Act or under any previous company law.
A company issues shares to each of its members which represent that that they hold such part of company and a person/entity holding such shares are known as shareholders. From time to time there are certain situations where an existing shareholder wanted to transfer their shares of respective company to other person/entity.
The provisions for share transfer are governed by section 56 of The Companies Act, 2013 and The Companies (Share Capital and Debentures) Rules, 2014.
What is share?
As per Companies Act, 2013 “share” means a share in the share capital of a company and includes stock. A share is an indivisible unit of capital, expressing the ownership relationship between the company and the shareholder. The denominated value of a share is its face value, and the total of the face value of issued shares represent the capital of a company, which may not reflect the market value of those shares.
A share transfer is the process of transferring existing shares, its related rights and liabilities from one person to another.
A transfer of share can only be transferred for only existing shares and from existing shareholders. Though the transferee can be existing shareholder or not of company.
The following is the process to transfer the Shares step wise: –
The following documents will be required to give effect for transfer of shares:-
A company can refuse to transfer the shares in case the above documents are not furnished. Such intimation for refusal along with reason has to be intimated to transferor and transferee within thirty (30) days from the receipt of share transfer deed.
If a company fails to abide by law then the company and every officer of the company who is in default shall be liable to a penalty of fifty thousand rupees.
Date of execution………………………………..
FOR THE CONSIDERATION stated below the “Transferor(s)” named do hereby transfer tothe “Transferee(s)” named the securities specified below subject to the conditions on which the said securities are now held by the Transferor(s) and the Transferee(s) dohereby agree to accept and hold the said securities subject to the conditions aforesaid.
Name of the company (in full):
Name of the Stock Exchange where the company is listed, if any:
DESCRIPTION OF SECURITIES:
|Kind/Class of securities
|Nominal value of each unit of security
|Amount called up per unit of security
|Amount paid up per unit of security
|No. of Securities being Transferred||Consideration Received (Rs)|
|In Figures||In Words||In words||In figures|
|Corresponding Certificate Nos:|
|Registered Folio Number||Attesation:
I hereby attest the signature of the Transferor(s) herein mentioned.
|Name(s) in full||Seller Signature (s)||Signature:|
|I, hereby confirm that the Transferor has signed before me.
Name and Address of Witness
|Name in full|
folio no., if
Folio No. of Transferee : ________________ Specimen Signature of Transferee
Existing Folio No. If any
Value of stamp affixed:____________(Rs.) 3._____________________________
For office use only
Checked by______________________ Signature tallies by ____________________________
Entered in the Register of Transfer on _________________vide Transfer No._______________ Approval Date___________ Power of attorney/Probate/Death Certificate/Letter of administration Registered on _________________________________________
Disclaimer: – The above article is prepared keeping in mind various provisions relating to transfer of shares under the Companies Act, 2013 and rules made thereunder. The author has tried to cover all the important and basic question relating to transfer of shares thereunder. Under no circumstance, the author shall not liable for any direct, indirect, special or incidental damage resulting from, arising out of or in connection with the use of the information.
(The Author is Corporate Consultant and provides varied array of services including Start-ups mentor, Secretarial, Legal, Trademark, taxation, Audit, GST, Book keeping and other ancillary advisory service in Delhi, Chandigarh as well as The National Capital Region (NCR) and can be contacted through email id:- [email protected] and Contact Number: 91-8178515005).