PROCEDURE FOR TRANSFER OF SHARES UNDER THE COMPANIES ACT, 2013
The following procedure to be followed for transfer of Shares:
- Obtain the transfer deed in the prescribed form i.e. Form SH-4, endorsed by the prescribed authority.
- The instrument of transfer may not be in the prescribed form in
the following cases:
- Shares transferred by a director or nominee on behalf of another body corporate under section187 of the Companies Act, 2013;
- Shares transferred by a director or nominee on behalf of a corporation owned or controlled by the central or state Government;
- Shares transferred by way of deposit as a security for repayment of any loan or advance If they are made with any of the following:-
- State Bank of India; or
- Any scheduled bank; or
- Any other banking company; or
- Financial Institution; or
- Central Government; or
- State Government; or
- Any corporation owned or controlled by the Central or State Government; or
- Trustees who have filed the declarations.
- For transferring debentures, the instrument of transfer need not be in prescribed form but standard format can be used, being convenient to do so.
- Get the transfer deed duly executed either by the transferor and the transferee or on their behalf in accordance with section 56 of the Companies Act, 2013 and the Articles of Association, in case of shares, and also in accordance with trust deed in the case of debentures.
- The transfer deed should bear stamps according to Indian Stamp Act and stamp duty notification in force in the state concerned. The present rate of transfer of shares is 25 paise for every one hundred rupees of the value of share or part thereof.
- See that stamp affixed on the transfer deed is cancelled at the time or before signing of the transfer deed.
- The signatures of the transferor and the transferee in the share/debentures transfer deed must be witnessed by a person giving his signature, name and address.
- Attach the relevant share or debenture certificate or allotment letter with the transfer deed and deliver the same to the company.
- Where the application is made by the transferor and relates to partly paid shares, the company has to give due notice of the amount due on shares/debentures to the transferee and the transferee shall raise objections, if any within two weeks from the date of receipt of the said notice.
- If signed transfer deed has been lost, affix the same stamp on a written application. In such case, the Board may, if it thinks fit to do so, register the transfer on such terms of indemnity as it thinks fit.
- If the shares of the company are listed in a recognized stock exchange, then the company cannot charge any fee for registration of transfers of shares and debentures.
The following checklist has been designed to help a company secretary in his work of processing of cases of share transfers:
- Each column of transfer deed (SH-4) is properly and adequately filled in.
- Date of execution is to be filled up properly.
- Name of the company and its Corporate Identification Number (CIN) is correctly given.
- Names of the recognized stock exchange, where dealt in, if any, have been given in the Instrument.
- Description of shares, viz., equity, preference etc. is correctly given. Kind or class of securities, nominal value of each unit, amount called up and amount paid up, number of securities being transferred (both in figures and words) and consideration received (both in figures and words) are to be mentioned clearly.
- Distinctive numbers of the shares mentioned in the share certificate(s) are to be mentioned in the deed.
- Corresponding share certificate numbers are to be entered in the transfer deed.
- Folio number of the transferor as given in the enclosed share certificate(s) is to be correctly entered in the transfer deed.
- Name and address of the witness to the signature(s) of the transferor(s) are legibly written in the transfer deed and the witness has signed the transfer deed.
- Signature(s) of the transferor(s) must tally with the specimen signature available with the company.
- In case of joint shareholdings, form shall be signed by all joint transferors.
- Particulars of transferee viz. Name, Father�s name, address, E-mail Id, occupation and existing folio number are to be correctly entered in the transfer deed.
- The transferee(s) or the buyer(s) has/have signed the Instrument.
- Relevant certificate(s) of shares or debentures or other securities is/are to be enclosed.
- If certificate was not issued, letter of allotment is to be enclosed.
- Share Transfer Stamps of appropriate value have been affixed on the Instrument and they have been properly cancelled by a rubber stamp or defaced otherwise. If the shares are listed, the valuation of the Share Transfer Stamps is to be determined based on their quoted value. At present the stamp duty on Transfer of shares is at the rate of twenty five paise for every hundred rupees of value of the shares on the date of sale, or part thereof.
- Where the transfer is proposed to be in the name of the minor(s), whether the articles of association of the company permit such registration of transfer and the shares are fully paid.
- Whether the transferor(s) and/or transferee(s) is/are non-resident Indians and if so, whether the transfer is permitted under the Foreign Exchange Management Act, 1999, and if not, whether specific permission of the Reserve Bank of India has been obtained.
- Where the transferor is a body corporate, whether board resolution of the transferor is passed to this effect and proper authority has been given by the Board of directors to the person signing as the transferor on behalf of the company.
- In case of listed company, comply with the formalities of SEBI (LODR) Reg, 2015 and other SEBI Guidelines.
- Check whether the shares under registration are subject to a lien of the company and if so, whether the company has lifted the lien.
- The transfer of shares must not contravene the provisions of SEBI (Substantial Acquisition of Share and Takeovers) Regulations, 2011.
DISCLAIMER: THE ARTICLE IS BASED ON THE RELEVANT PROVISIONS AND AS PER THE INFORMATION EXISTING AT THE TIME OF THE PREPARATION.IN NO EVENT I SHALL BE LIABLE FOR ANY DIRECT AND INDIRECT RESULT FROM THIS ARTICLE. THIS IS ONLY A KNOWLEDGE SHARING INITIATIVE.