Share Transfer

Share transfer is an important process whereby shareholders to sell or transfer their shares in a company to other individuals or organizations. It ensures the availability of the stock for different buyers and investors by keeping the market liquid. Nevertheless, there are a lot of rules and regulations which are in place in order to make share transfer a transparent process and take into account the interests of all shareholders.

CompRegi has experienced the intricacies associated with the share transfer process, and we know this all too well. The entire procedure will be run by the legality team, who are experienced in law regulations and will assist you in being compliant with the procedure.

Documents required for Transfer of Shares

Share Transfer Cost

We at Compregi believe in complete transparency in the complete registration process of your company. Below mentioned cost structure includes all the necessary government fees required at multiple stages of registration.

MOA AMENDMENTS

1499/-
  • Free Consultancy
  • Free Search Check
  • Preview before Filing

SHARE TRANSFER

1499/-
  • Free Consultancy
  • Free Search Check
  • Preview before Filing
  • 100% Peace of Mind

INCREASE AUTHORIZED CAPITAL

1499/-
  • Free Consultancy
  • Free Search Check
  • Preview before Filing

What is the meaning of Share Transfer ?

Share transfer can be described as the free willed surrender of the rights and duties of a company member to an individual who would like to acquire the membership represented by a share in the company by a current shareholder who no longer wishes to have a membership in the company. This function is by the Companies Act, 2013, legislation that deals with securities transfer and transmission.

Under the guidance of Section 56 of the Companies Act, 2013, the transfer of shares has to be recorded within 30 days since the instrument of transfer is delivered to the company. The sale of shares is a contractual process, and therefore both the seller and the buyer need to go through the procedure for a regular and valid transaction.

At CompRegi, we provide guides for our clients through the shares transfer process while by the sections of the Companies Act which guarantee the clients a low workload and free from all complexities.

What are the rules for share transfer ?

  1. The legislations which govern the share transfer are to a great extent the Companies Act, 2013, and the company’s Articles of Association (AOA). Some key rules include.
  2. The transfer instrument must be in the prescribed form (Form SH-4) and duly stamped.
  3. The transfer deed must be executed by both the transferor and the transferee, their signatures being affixed.
  4. The share certificate/allotment letter must be provided with the transfer deed and been sent to the company.
  5. The company may determine the due fee for transferring the title, applicable to the limits that are in the AOA.
  6. Shares that are partially paid have a condition that the company should notice the transferee and ask for a no-objection certificate within one week from the date of the receipt of the notice.

Required document for share transfer

The following documents are required for a share transfer:

How does AOA help in Share transfer

The AOA, one of a company’s foundational documents, is the principal document in the share transfer process. The AOA may contain specific provisions related to the transfer of shares, such as:

  1. Regulations of the transfer of shares (e.g., right of first refusal, pre-emptive rights)
  2. Transfer process of the shares
  3. Transfering the title within the set time frame.
  4. Fees payable for transfer registration in a name.
  5. Powers of Board of Directors, in terms of refusal to accept of the transfer.

The share transfer process is crucial and should be started once the AOA is studied and understood carefully to ensure the compliance with the company’s internal rules and regulations.

At CompRegi, we review the AOA document in detail and then guide our clients step-by-step through the share transfer process that meets the demands of the specific document of the respective organization so that the transfer goes as smoothly as possible without any legal mistakes from your side.

Penalties and Time Limit

Time Limits

  • A Company having share capital: The Company shall not allow any transfer of securities of the Company or member’s interest in the Company other than the beneficial owner without a proper instrument of transfer, which shall be 60 days from the execution of the instrument.
  • Application by transferor alone: The transfer registration shall be carried out only if the company files an application to the transferor and the transferee provides a no objection certificate within 2 weeks of the application’s receipt.
  • Company shall deliver certificates of all securities allotted/ transferred/ transmitted in the following cases and within the following mentioned time limits:
  1. For the case of memorandum subscribers – within 2 months from the date of incorporation.
  2. Relevant to the case of its shares – allotment of which can be seen within two months from the date of allotment.
  3. The company needs to hand over the instrument of transfer/ intimation of transmission within 1 month of date of its receipt.
  4. Debenture entitlement will be done within the period of 6 months from the issuance of debenture

Penalties

For the company: The least one should have is Rs. 25,000 maximum, up to Rs.5,00,000

For the defaulting officer: At least Rs.10,000/-. From 0 to Rs. 10000 and a maximum of Rs.1,00,000

FAQs

Are there shares that other people can hold?

Mainly, shares can be transferred to anyone interpersonally unless the Articles of Association of the company mention specific restrictions like a right of first refusal or pre-emption rights in favor of existing shareholders.

Is stamp duty necessary to be paid per share transfer?

Yes, on the share transfer deed, the stamp duty is obligatory as per the Indian Stamp Act, and the notifications on stamp duty are in force in the concerned state. The current stamp duty rate for share transfer is 0.25 Indian rupees for every hundred Indian rupees of the value of each share or part thereof.

Which shares can be partially paid?

Transferable partly paid shares also exist. Nonetheless, a notification has to be sent to the transferee regarding the amount due on the shares and an NOC to be gotten from the transferee within 2 weeks of receiving the notification.

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