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Transfer of Shares

Legal Features

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





Minimum Requirments

  • Income Tax PAN of both the transferee and the transferor
  • Passport size colour Photo of both the transferee and the transferor

Basic Documents

Books of Accounts

  • Original Share Certificates of the Transferor

Other Documents

  • Aadhaar Card or Electricity Bill or Passport or Driving License or Voter ID Card of both the transferee and the transferor


Every business entity which has been registered under the GST Act has to be filed the following GST Return on or before specified due dates.

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