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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

  • House property
  • Copy of old ITR which is Earlier Filed
  • Income Statement
  • Balance sheet
  • TDS Certificate
  • TDS Return (all Quarters)
  • Audited Balance Sheet with all schedules

Basic Documents

Books of Accounts

  • PAN card/Pan Number
  • Tax payment challans (Self-assessment, advance tax, if you have deposited the same
  • TDS Deduction Sheet with all deductee details as like PAN, Name, Date of Payment, Amount Credited, etc.
  • All Bank account information

Other Documents

  • For TDS deducted in Apri to February: 7the Day of Next Month of deduction of month
  • For TDS deducted in March: 30th April

Notes

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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