Share Transfer Procedure Initiation

Step 1:
Review the Articles of Association of the Private Limited Company to identify any restrictions or conditions related to share transfers.

Step 2:
The shareholder intending to transfer shares must submit a written notice to the Company Director expressing their intention to transfer their shares.

Step 3:
Determine the offer price for the shares as per the Articles of Association. Usually, this price is fixed by the Company Directors or an appointed Auditor.

Step 4:
The company must inform the existing shareholders about the shares available for transfer, specifying the price and the deadline for purchasing these shares.

• If existing shareholders wish to purchase, shares will be allotted to them first.

• If no interest is shown or shares remain unclaimed, they may be transferred to external parties.

Procedures for Share Transfer – Physical Mode

The transfer of share ownership can occur through the physical delivery of shares; however, it is important to recognize the existing contractual relationship between the shareholders and the company. When shares are transferred, this contractual relationship is assigned to the new owner, which requires a formal instrument of transfer.

The share transfer process involves several steps:

1. Agreement to Sell: The process begins with the execution of a Share Transfer Deed, which establishes the agreement between the transferor and transferee.

2. Execution of Deed of Transfer: The Share Transfer Deed must be executed by both parties.

3. Registration of Transfer: Finally, the transfer is registered with the company.

A Share Transfer Deed is a formal document that must be properly stamped and executed by both the transferor and transferee. It must be submitted to the company along with the relevant share certificate. The company will not accept any transfer instrument that does not meet these requirements. The physical transfer of shares is carried out using Form SH-4.

Scrutiny:
Upon receiving the transfer documents, the company conducts a thorough review within 3 to 5 days to ensure all documents are complete and valid. If any documents are incomplete or if the transferor’s signature on the transfer instrument does not match the company’s records, the documents will be returned to the transferee.

Acknowledgment:
Some companies issue an acknowledgment or notice to the transferor upon submission of the transfer documents. This acknowledgment often includes a checklist for document review. Additionally, some companies provide a transfer receipt.

• If the transfer application is submitted only by the transferor, and he has made a partial payment for the shares, the company cannot register the transfer unless it receives acknowledgment from the transferee, who must not object within two weeks of receiving notice.

• There is no legal obligation for the company to notify the transferor if the transfer documents are submitted by the transferee.

Approval

All share transfers must be submitted to the Board of Directors or an appropriate committee for approval. The registration of the transfer takes place only after receiving this approval. If the transfer meets all required criteria upon review, it must be endorsed by the designated authority. The board holds the responsibility for approving share transfers; however, if the company’s Articles of Association allow, this authority may be delegated to a committee that need not comprise company directors.

Registration

The registration of a share transfer is crucial for the transferee to obtain membership status within the company. A share transfer is incomplete without formal registration. The share transfer form acts as a document wherein the transferee agrees to accept the shares, thereby creating a legal contract with the company. Upon approval and registration by the company, the transferee’s name is entered into the register of members, confirming their membership. It is important to note that maintaining a separate register of share transfers is not a statutory requirement.

Delivery of Share Certificate

The transfer becomes effective only once the company registers the shares. The company must deliver the share certificate to the transferee within one month of receiving the duly endorsed transfer instrument. The transfer instrument must clearly mention the name of the transferee.

Accura Tax Solutions Services – Support in Transitioning a Share Transfer (Company)

• Purchase a Plan for Expert Assistance

• Add Queries Regarding the Transfer

• Provide Documents to Accura Tax Solutions Expert

• Complete All Required Formalities

• Get Your Share Transfer Processed Efficiently!