Procedures involved in Share Transfers, Time Limits, and Penalty for non-compliance

• A company's essential aspect is that its shares are transferable.
• Legally speaking, a company's shares or debentures are considered movable property.
• They are transferable in accordance with the terms of the company's articles, most prominently the shares held by any member of a public company.
• Securities can be transferred by a contract or a special agreement between two or more parties.
• The Companies Act addresses the laws regulating the transfer and transmission of securities/shares extensively.
• The loss of title to securities as a consequence of death, ascension, inheritance, insolvency, or other similar occurrences is referred to as "transfer of securities."
• It is essentially the transfer of a member's rights and obligations to another individual who desires to be a member of the company.

What does the share transfer mean?

• The consensual/voluntary transfer of a company member's rights and possibly obligations is referred to as a share transfer.
• The rights and obligations of a share transfer are transferred from a shareholder who desires to no longer be a member of the company to an individual who wants to become a member.
• Thus, in the absence of any stated restrictions under the company's articles, shares of a company are transferable similar to any other moveable property.

Individuals that are involved in the transfer or transmission of share

• Subscribers of the memorandum
• In the event of a death, a legal representative is appointed
• Transferor
• Transferee
• Company Members (listed or unlisted)

Under the Companies Act of 2013, there is a proper procedure for transferring or transmission of shares

• To begin, the transfer deed must be obtained in the specified form, Form SH-4, and must be approved by the specified authorities.
• In the following circumstances, the transfer deed or instrument of transfer may not be in the specified form (Form SH-4):

1. In a situation where the company's director or nominee transfers shares on representing another corporate body pursuant to section 187 of the Companies Act, 2013.
2. When a company's director or a nominee transfers shares on the behalf of a government-owned or controlled corporation;
3. In the situation where the shares are transferred as collateral/security and if it pertains to any of the below-mentioned banks or institutions.

• State Bank of India; or
• Any other banking company; or
• Any scheduled bank; or
• Financial Institution; or
• Central Government; or
• Any corporation owned by the Central or State Government; or
• Trustees who have filed the declarations.

Kindly Note: A uniform/standard format can be utilised to transfer debentures.

• Substantiate the articles of association for shares, the trust deed for debentures, and the transfer deed pursuant to the Companies Act, 2013.
• A stamp is mandatory on the transfer deed in accordance with the Indian Stamp Act and the state notification on stamp duty.
• A person who authorises/ approves a transfer by signing his signature and other credentials must see the transferor and transferee sign the share/debentures transfer deed personally.
• The necessary share/debenture allocation certificate letter must be duly attached and delivered to the company together with the transfer deed.
• If the transferor's application is for partially paid shares, the company is obliged to duly inform the transferee of the outstanding amount on the shares/debentures.
• Additionally, the transferee is obliged to provide a letter of no objection within two weeks post receiving the stated notification.
• If the signed transfer deed is misplaced, attach the same value stamp to a formal written application. In these circumstances, the board is obliged to recognize the transfer that is also subject to various indemnity provisions as it deems relevant.
• If the company's shares are formally listed on a registered stock market, the company is not permitted to deduct/charge a registration fee share and debenture transactions.

In the following two instances, a company is not needed to register the partial transfer of shares:

• The company has served the transferee with a notice in Form No. SH.5.
• Until the transferee provides a letter of no objection to the transfer in two weeks of receiving the company's notice.

Time Limits

• A company with a share capital: It is obligatory that a company must not register the company's securities transfer or the members' interest, excluding the beneficial owners, without a duly completed instrument of transfer in 60 days post-execution.
• The transfer will not be registered until and unless the company notifies the transferor of the application and the transferee produces a certificate of no objection within two weeks of receipt of the notice.
• The company shall furnish certificates for all securities issued, transferred, or transmitted in the following circumstances and within the time periods specified below:-
• In the event of memorandum subscribers- within two months of the date of formation.
• In the event of an allotment of any of its shares- within two months from the date of the allotment.
• In case the company receives the instrument of transfer- In 1 month post the date of receiving.
• Debenture's allotment – Within 6 months after the date of allocation.

Penalty for non-compliance

• In the case of a company – Minimum Rs. 25,000 - Maximum is Rs. 5,00,000.
• In case an officer does a default– Minimum is Rs. 10,000 - Maximum is Rs. 1,00,000.

Get the best service for the transfer of shares

• We, at Careful Counting, provide service for the transfer of the company’s shares.
• We have a profound experience of more than a decade in the field of corporate compliance.
• Provide us with some basic documents and we will get started right away.

Basic Documents Required

• Numbers of shares held
• The amount of share held
• Bank Statement confirming the share transfer consideration paid.
• Form SH-4 duly signed by transferor and transferee

Other Documents:

• Company's Name
• Registered Address
• Corporate Identity Number
• Transferor and transferee Aadhar card and PAN Card copy