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Company Share Transfer

8950* Basic Package

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Overview

Company Share Transfer

As per the Companies Act, the private limited company's ownership is shareholding of the company. If any private limited company wants to recruit new investors or shift the private limited company's ownership, then the share of the private limited company would have to be shifted.

Restriction for Share Transfer in the Articles of Association 

A private limited company is an association of the members. It is anyhow related to a partnership firm. Thus, the share transfer in a private limited business may be bound by the Articles of Association. It is necessary that the article of association of a limited private organization must be analyzed before initiating the share transfer method. 

Restraints on the rights of the shareholders to transfer the share are of two forms:

Pre-emption rights: 

According to the pre-emption rights, if a shareholder wishes to sell his/her shares, those shares must be 1st offered to the existing members of the private limited company. In such cases, the director of the company determines the prices. The share cost of a private limited company can be set by the methods directed in the Articles of Association. If none of the present members confirms interest in buying the shares, it may be given to the outsiders.  

Power of the directors to decline:

The directors of the company may have the power to decline the share transfer under the prescribed methods of Articles of Association.

Only the restraints in the articles of association are legally adhesive. Any separate contract within the stockholders is not adhesive either on the company or on the stakeholder. Further, the share shift can only be governed by the Article of Association. The right to transfer the share cannot be totally obstructed or outlawed. 

Initiation of the Share Transfer

To start the Share transfer of a private limited company, the article of association of the private limited company must be reviewed. And if there are any limitations, it must be labeled. 

The stockholder must provide the declaration to the director in writing about the plans to shift the share.

The price of the share should be determined as per the article of the association. And it should be first offered to existing members.

Then after that, the private limited company must give notice to other shareholders about the availability of the shares. If any shareholders interested come forward, then they must be allotted. In case no shareholders come forward, it can be offered to the outsiders.

Transferring the share of a private limited company

Before starting the share transfer, the private limited company must obtain the transfer deed as per the format in the Articles of Association. Then the transferor and the transferee signs share transfer deed. After that, the share transfer deed holds the stamp by the stamp Act. One witness will also sign the transfer deed along with signature, name, and address. The company then will prepare all the documents and assign the new share testimony in the name of the transferee.

Corporal Mode:

The title of shares can be assigned with the transfer of the settlement. But the members and the company have a contractual relationship. When a share transfer initiates, the contractual relationship is authorized to the transferee that needs an instrument of transfer. 

Transfer Deed:

The transfer deed is an instrument needed for the share transfer. It must be executed by both the transferor and the transferee. The Share transfer agreement must be accurately imprinted and handed over to the company. It should also include all the certificates of share transfer. The company would not accept any instrument of transfer that doesn't meet the above provisions. In the physical model, the execution of the share transfer is done via SH-14. 

 Acceptance 

Some organizations send a certification of confirmation of the instrument to transferor who has resided transfer with a private limited company. The confirmation is usually sent before examining the document. It usually comes in the frame of a letter with checklists for inspection of the alteration of the document.

Some companies also issue a transfer receipt. If the transfer petition is made by the transferor himself and he has settled for shares partly, then the private limited corporation must not shift unless the company accepts the transferee. There is no compulsory responsibility of the organization to the transferor when the alteration documents are presented to the transferee. 

Inspection:

After accepting the transfer document, the organization should do the investigation to ensure that all the papers are in its place. It must be done within 3-5 days from receiving the transfer documents. If in case the transfer of the documents is not accepted, it must be returned to the transferee. 

Permission

Every alteration of a share of a limited private organization must place before the director of the business. The director or the committee will approve it. The registration of the share transfer takes place only after the approval of the consent. If everything is accepted after scrutiny, the transfer is done. If the private limited company's articles provide the power to the board to proxy the power of approval, it may be delegated to a committee that is not the company's director. 

Registration

The registration of share transfer of a private limited company is a must for the transferee to ensure himself as a member of the company. Without the registration, a share transfer is never valid. A Share transfer is a legitimate certificate through which a transferee consents to accept the shares of a limited private organization.

It becomes a proper agreement with the corporation. Thus, once the business accepts and designates the transfer, it leads to the listing of transferee name in the registry of the members in a limited private organization. However, the maintenance of the register is not mandatory for all the companies. 

Issuance of the share certificate:

The transfer of the share becomes effective on the date of the registration. In such cases, the company shall provide the transfer certificate from the receipt of the company instrument. 

Document Required

  • Board Resolution
  • Details of Buyer
  • Details of Seller

Time Lines

  • (3 to 15 Days)
  • Purchase the Service
  • Upload / send the Documents
  • Discussion with expert
  • Filing of application with registrar authorities
  • Receipt of Registration Certificate
  • Confirmation to client

Service Covered

Pricing for what you want required service

Basic

8950*
  • Expert Consultation
  • Documents Preparation
  • Transfer of Share from one person to another person

Business

12950*
  • Expert Consultation
  • Documents Preparation
  • Transfer of Share from one corporate to another corporate

Enterprise

21950*
  • Expert Consultation
  • Documents Preparation
  • Transfer of Share from one entity to another entity and any party is foreign national or foreign entity
  • Notes:
  • * This price is inclusive of all Govt filing fee and excluding GST amount.

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