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Transfer of Share in a Private Company
Generally articles contain the detailed provisions as regards the procedure for transfer of shares. Usually following steps shall be followed by a private company to give effect to the transfer of shares:—
Transferor should give a notice in writing for his intention to transfer his share to the company.
The company in turn should notify to other members as regards the availability of shares and the price at which such share would be available to them.
Such price is generally determined by the directors or the auditors of the company.
The company should also intimate to the members, the time limit within which they should communicate their option to purchase shares on transfer.
If none of the members comes forward to purchase shares then the shares can be transferred to an outsider and the company will have no option, other than to accept the transfer.
Get the Share transfer deed in form SH-4 duly executed both by the transferor and the transferee.
The transfer deed should bear stamps according to the Indian Stamp Act and Stamp Duty Notification in force in the State concerned. The present rate of transfer of shares is 25 Paise for every one hundred rupees of the value of shares or part thereof. Do not forget to cancel the stamps affixed at the time or before signing of the transfer deed.
The signatures of the transferor and the transferee in the share transfer deed must be witnessed by a person giving his signature, name and address.
Attach the relevant share certificate or allotment letter with the share transfer deed and deliver the same to the company. The share transfer deed should be deposited with the company within sixty (60) days from the date of such execution by or on behalf of the transferor and by or on behalf of the transferee.
After receipt of share transfer deed, board shall consider the same. If the documentation for transfer of share is in order, board shall register the transfer by passing a resolution.
Transfer of Share in a Public Company
Section 58(2) provides that the shares or debentures and any interest therein of a public company shall be freely transferable. Usually following steps shall be followed by a private company to give effect to the transfer of shares:—
The procedure of registration of shares gifted is same as the procedure for a normal transfer. The stamp duty is also applicable in case of gifted shares, and the duty is at 0.25% of the market value prevailing on the date of execution of the transfer deed by the transferee.
The stamp duty applicable on share transfer is at 0.25% on the market value on the date of execution of the transfer deed. Share Transfer Stamps can be obtained from the authorised stamp vendors. Your sharebroker can also help you in this regard.
Please fill in all the columns of the transfer deed, sign as transferee at appropriate places and affix share transfer stamps at 0.25% of the market value on the date of execution of the transfer deed. Please ensure that the transfer deed is duly filled in and executed as explained, to avoid any discrepancy/objection on lodgement.
You have to execute a transfer deed, duly stamped and submit the same to our R & T Agent for transfer. Please note that such addition of name amounts to change in ownership of shares and the procedure for transfer has to be followed.
A transfer deed is valid for a period of one year from the presentation date indicated in the stamp affixed by the Registrar of Companies on the upper portion of the deed or the closure date of Register of Members immediately after the presentation date, whichever is later. Please check whether your transfer deed is still valid. If so, submit the transfer deed duly executed and stamped along with share certificates to our R & T Agent for transfer in your favour. If the validity period of the transfer deed has expired you will have to approach the Registrar of Companies for extending the validity of the transfer deed. Alternatively, you may approach the registered holder/seller whose signatures are appearing on the transfer deed as seller to execute fresh transfer deeds. Thereafter you may submit the fresh/revalidated transfer deed to our R& T Agent for transfer. Revalidation of transfer deed(s) is not applicable in case of entities which are not under the purview of Registrar of companies.