Shareholders have the ability to transfer their shares to existing shareholders or third parties. Shares in a company are freely transferable. Shares are transferred by way of gift or sale. Typically, shares are transferred to introduce a new shareholder. The transfer of shares may fall under the following categories:
1) Transfer among existing shareholders
2) Transfer to new persons
3) Transfer from resident Indians to non-resident or non-resident to resident
4) Transmission of shares
In a Private Limited Company, Directors have right to refuse any transfer of shares once the reasons are in the best interests of the company and are not oppressing any shareholder rights. A private limited company is considered to be a “closed corporation” of members. Therefore, the share transfer in a Private Limited Company can be restricted by the Articles of Association (AOA). Hence, the Articles of Association of the Company must be reviewed prior to beginning the share transfer procedure.
A) Obtain share transfer deed in the prescribed format.
B) Execute the share transfer deed duly signed by the Transferor and Transferee.
C) Stamp the share transfer deed as per the Indian Stamp Act and Stamp Duty Notification in force in the State.
D) Have a witness sign the share transfer deed with his/her signature, name and address.
E) Attach the share certificate or allotment letter with the transfer deed and deliver the same to the Company.
F) The company must process the documents and if approved, issue new share certificate in the name of the transferee.
RESOLVEO can help you in transfer of shares by complying with all legal requirements