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Company Share Transfer

To induct new investors or transfer ownership of the Company, the share of the private limited company would have to be transferred. In private limited companies, the transfer is restricted. We help you to plan and execute the share transfer.

  • Transfer of Share

Transfer of Shares of a Company

A private limited company is considered to be a “closed corporation” of members, similar to a Partnership Firm. Therefore, the share transfer in a Private Limited Company can be restricted by the AOA. Hence, the Articles of Association of the Company must be reviewed prior to beginning the share transfer procedure. The limits are imposed to protect the rights of investors and shareholders.

To initiate the share transfer procedure, the following steps must be followed:

1: Review the AOA: Articles of Association of the Private Limited Company must be reviewed and restrictions, if any must be addressed.

2: Shareholder must give notice in writing to the Director of the Company about intention to transfer share of the company.

3: Determine the price as per Articles of Association at which the shares of the Company will first be offered to present shareholders of the Company. (Usually this price is determined by the Directors of the Company or an Auditor of the Company.)

4: The company must then give notice to the other shareholders about the availability of share, the last date to purchase the shares and the price at which the share are available.

Documents Required For Transfer of Shares

Here is the list of the documents required from the directors and for the company’s registered address for the incorporation of the company. 
S.NoA. Documents of Directors/Shareholder
1.
Original Share Certificate of share to be transferred
2.
Certificate of Stamp duty payment (Franking) on issue of share certificate
3.
Valuation and the share transfer agreement
4.
Share transfer form duly signed by the parties
5.
ID and address proof of the transferor and transferee
6.
Proof of payment of consideration of transfer if any

Transfer of Share Process

To effect the share transfer, the following steps must be followed:

  • Step 1: Obtain share transfer deed in the prescribed format.
  • Step 2: Execute the share transfer deed duly signed by the Transferor and Transferee.
  • Step 3: Stamp the share transfer deed as per the Indian Stamp Act and Stamp Duty Notification in force in the State.
  • Step 4: Have a witness sign the share transfer deed with his/her signature, name and address.
  • Step 5: Attach the share certificate or allotment letter with the transfer deed and deliver the same to the Company.
  • Step 6: The company must process the documents and if approved, issue new share certificate in the name of the transferee.