Physical shares of private limited

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ARUN GUPTA (Querist)

30 March 2021 I have shares of a private ltd company in physical form. Can i sale the shares in physical form. I have shares of non listed public company in physical form. Cani sale the shares in physical form. Please advise urgently ?

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

10 July 2024 In India, the sale of shares of private limited companies (both listed and non-listed) typically involves certain procedures and regulations, whether the shares are in physical or dematerialized (electronic) form. Here’s a general overview based on common practices:

### Sale of Shares in Physical Form:

1. **Private Limited Company (Non-Listed)**:
- **Approval Requirements**: Generally, if you wish to transfer shares of a private limited company (whether listed or non-listed) in physical form, you will need to adhere to the provisions stated in the Articles of Association (AoA) of the company.
- **Transfer Deed**: A transfer deed must be executed and stamped as per the Stamp Act, along with the physical share certificates.
- **Share Transfer Form**: Both the transferor (seller) and transferee (buyer) need to fill out and sign the share transfer form, which should be affixed with appropriate share transfer stamps.
- **Board Approval**: The transfer usually requires approval from the board of directors of the company.

2. **Non-Listed Public Company**:
- Shares of a non-listed public company can also be transferred in physical form, subject to compliance with the company’s AoA and other applicable regulations.
- Similar procedures for executing a transfer deed, obtaining board approval, and stamping apply as with private limited companies.

### Considerations:

- **Stamp Duty**: Ensure that the transfer deed is properly stamped as per the prevailing Stamp Act requirements.
- **Company's AoA**: Review the Articles of Association of the company for any specific provisions regarding share transfers.
- **Legal Advice**: It's advisable to seek legal advice to ensure compliance with all legal requirements and to facilitate a smooth transfer process.

### Dematerialization (Optional):

- While physical shares can be transferred, there is an option to dematerialize them (convert to electronic form) through a Depository Participant (DP) registered with SEBI. Dematerialization can simplify future transfers and reduce paperwork.

### Conclusion:

Yes, you can sell shares of both private limited companies and non-listed public companies in physical form, subject to compliance with applicable laws and company regulations. Ensure all necessary documentation, including transfer deeds and board approvals, are in place. For precise guidance tailored to your specific situation, consulting with a legal advisor or a company secretary experienced in corporate law would be beneficial.

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