1. Section 56(1)
For transfer of shares there shall be following conditions-
a. Proper instrument of transfer of shares in physical form shall be in Form SH-4 i.e Share Transfer Deed.
b. shall be duly stamped;
c. Shall be dated and executed by or on behalf of the Transferor and the Transferee,
d. Share Transfer deed shall specifying the name, address, occupation if, any of the transferee.
e. It shall be delivered by the Transferor to the Company along with the Share Certificate, if no Share certificate along with the letter of allotment.
2. Proviso to Section 56(1)
In case instrument of the transfer-
a. Lost,
b. not delivered within 60 days from its execution ;
then in such case the company may registered the transfer on such terms as to indemnity the Board as may think fit.
3. Section 56(2)
Section 56(1) not applicable in case of transmission of any right to securities by operation of law and any person to whom such right has been transmitted.
4. Section 56(3)
In case of transfer of shares a Company shall not recorded the transfer of shares unless the company has given a notice in Form No.- SH-5 to the transferee and the transferee has given NOC to the transfer within 2 weeks from the date of receipt of Notice.
5. Section 56(4)
Delivery of share certificate-
a. Within 2 Months from Incorporation date, in case of the subscriber to the Memorandum.
b. Within 2 Months from the date of allotment, in case of allotment of any shares.
c. within a period of 1 Month from the receipt of the share transfer deed or as the case may be the intimation of transmission of shares/Securities;
d. 6 Months from the date of allotment in case of any of debentures.
In case where the securities are dealt with the depository, the company shall intimate the details of allotment of securities to the depository immediately on allotment of such securities.
6. Section 56(5)
The legal representative of any deceased person, can transfer the securities of the deceased person, even if the legal representative is not the holder thereof, be valid as if he had been the holder at the of execution of the share transfer deed.
7. Relevant points for transmission of securities
i. Person entitled who can make application for transmission of Securities.
a. Legal heir in case of deceased person by producing the probate, succession certificate etc.
b. In case of persons jointly holding the shares in such case Survivors shall only be entitled for the registration of transmission of securities and the legal heir of the deceased person shall not be entitled for transmission.
ii. No need of Share transfer deed for transmission of Securities.
iii. Documents to be required in case of Transmission;
a. CTC of death certificate;
b. Probate;
c. Succession certificate;
d. Signature of the successor;
iv. Stamp duty shall not be paid on Transmission
v. Company can refuse the registration of securities in accordance to the power given in section 58 of the Companies Act, 2013, it can refuse the transmission within 30 days from the date on which the intimation of transmission delivered to the Company.
vi. Appeal against refusal
a. In case Pvt. Company
as per section 58(3) the person who intimated the company, may appeal to the NCLT against refusal within 30 days from the date of receipt of the notice and if no notice has been sent by the company, within a period of 60 days from the date of the receipt of the refusal.
b. In case of Public Company
as per section 58(3) the person who intimated the company, may appeal to the NCLT against refusal within 60 days from the date of receipt of the notice and if no notice has been sent by the company, within a period of 90 days from the date of the receipt of the refusal.
8. Procedure for transmission of shares
i. Article shall contain the provisions of Transmission of shares.
ii. An application by the legal heir or as the case may be by survivors in case of joint holding, shall make an application to the Company with the following annexure;
a. Death Certificate;
b. Succession Certificate;
c. Probate, etc
iii. After receipt of application the company shall record the particulars of death certificate and a reference number of recording entry is given to the shareholder so as to enable him to quote such number in all future correspondence with the company.
iv. The Company shall make proper scrutiny of the documents and if found in order, Company shall approved the transmission and register the shares in the name of legal heir or as the case may be survivor in case of joint holder.
v. Dividend declare before the death of the death of the shareholder shall be payable to his legal heir.
9. Section 56(6)
Liability in case of Default-
a. In case of Company
Minimum fine- 25,000 Rupees
Maximum fine- 5,00,000 Rupees
b. In case of Officer in Default
Minimum fine- 10,000 Rupees
Maximum fine- 1,00,000 Rupees
10.Section 56(7)
In case where the Depository or DP with an intention to defraud any person transfer the securities then it shall be liable us 447 of the Companies Act, 2013.
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