Transfer of shares -Procedure in India under Companies Act 2013
Shares in a company are transferrable like any other movable property in absence of any restriction under the articles of the Company.
Section 56 of the Companies Act, 2013 provides that the transfer of shares of the company and other securities will be registered by a company only when proper instrument of transfer of shares (share transfer form) is filed as prescribed in the Form No. SH-4. The Form SH-4 for transfer of share needs to be duly stamped, with adequate value, dated and executed by or on behalf of the transferor and the transferee.
Note: A company shall not register a transfer of partly paid shares in these two cases:
The Procedure for T ransfer of shares in a Private Company:
Articles of the Company or their association govern the share transfer procedure in private limited company.
Steps to transfer of shares in a Private Limited Company:
Stamp Duty on Transfer of Shares
Share transfer form need to be duly stamped, as per Companies Act, 2013 also stamp should have adequate value with the date.
It should also be cancelled in accordance with section 12 of the Indian stamp Act, when you have to send the share transfer form is to be sent to the board of directors.
The seller of the shares has to pay the stamp duty at the rate of Rs 0.25 for every Rs. 100 worth of shares. For stamping purpose in a transfer of shares special adhesive stamps having the word ‘share transfer’ shall be used.
Section 8A of the Indian Stamp Act provides that for the electronic share transfer form, India. You can pay the stamp duty on the total amount of issuing the shares or securities.
A Company having share capital:- The Company shall not register transfer of securities of the Company or member’s interest in the Company other than beneficial owners without a proper instrument of transfer within a period of 60 days from the date of execution.
Application by transferor alone:- The transfer shall not be registered until and unless the company gives notice of the application to transferor and transferee gives no objection certificate within 2 weeks from receipt of the notice.
Company shall deliver certificates of all securities allotted/ transferred/ transmitted in the following cases and within the following mentioned time limits:-
Receipt by the company of the instrument of transfer/ intimation of transmission – within a period of 1 month from the date of receipt.
For company – Minimum is Rs. 25,000 and maximum is Rs. 5,00,000 For an officer In default – Minimum is Rs. 10,000; and maximum is Rs. 1,00,000