Statutory Remedy Against Refusal to Transfer Shares Under Section 58 of the Companies Act 2013

The process to be followed by the shareholders, if the company refuse to transfer their shares. The power can be exercised by the shareholders as per the provisions of section 58 of the Companies Act, 2013.

Statutory Remedy Against Refusal to Transfer Shares In case of private company

1. If a private company limited by shares refuses (whether in pursuance of any power of the company under its articles or otherwise), to register the transfer of, or the transmission of the right to any securities or interest of a member in the company, then the company shall send notice of the refusal to the transferor and the transferee or to the person giving intimation of such transmission, within a period of thirty days from the date on which the instrument of transfer, or the intimation of such transmission, was delivered to the company.

2. Notice shall contain the reasons for refusal to register the transfer or

3. After receiving the refusal letter, the transferee may appeal to the Tribunal against the refusal within a period of thirty days from the date of receipt of the notice or

4. In case no notice has been sent by the company, within a period of sixty days from the date on which the instrument of transfer or the intimation of transmission, was delivered to the company.

Statutory Remedy Against Refusal to Transfer Shares In case of public company

1. If a public company without sufficient cause refuses to register the transfer of securities within a period of thirty days from the date on which the instrument of transfer or the intimation of transmission, is delivered to the company, the transferee may, within a period of sixty days of such refusal or where no intimation has been received from the company, within ninety days of the delivery of the instrument of transfer or intimation of transmission, appeal to the Tribunal.

2. After receiving the appeal, the Tribunal, after hearing the parties, either dismiss the appeal, or by order—

3. direct that the transfer or transmission shall be registered by the company and the company shall comply with such order within a period of ten days of the receipt of the order; or

4. direct rectification of the register and also direct the company to pay damages, if any, sustained by any party aggrieved.

The order If a person contravenes the order of the Tribunal, he shall be punishable with imprisonment for a term not less than one year but may extend to three years and with fine not less than one lakh rupees which may extend to five lakh rupees.

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