10 August 2024
The procedures for share allotment and share transfer in a Private Limited Company under the Companies Act, 2013 involve specific steps and compliance requirements. Here’s a detailed guide for each process:
### **Share Allotment Procedure**
**1. ** **Board Meeting to Allot Shares:**
1. **Prepare a Board Resolution:** - Convene a board meeting to pass a resolution for allotment of shares. The resolution should detail the number of shares, the allotment price, and the name of the allottees.
2. **Issue Allotment Letter:** - Prepare and issue an allotment letter to each shareholder, confirming the allotment of shares.
**2. ** **Filing with ROC:**
1. **Form PAS-3:** - File **Form PAS-3** (Return of Allotment) with the Registrar of Companies (ROC) within 30 days of the allotment. This form includes details of the shares allotted and the names of the allottees.
2. **Attach Documents:** - Attach the following documents with Form PAS-3: - Copy of the board resolution authorizing the allotment. - Copy of the allotment letters issued to the shareholders. - Proof of payment for the shares allotted (bank statements, etc.).
**3. ** **Update Register of Members:**
1. **Maintain the Register:** - Update the **Register of Members** to reflect the new shareholders and the number of shares allotted to them.
2. **Issue Share Certificates:** - Prepare and issue **share certificates** to the allottees as evidence of ownership. Share certificates should be signed by the company’s directors and/or company secretary.
**4. ** **File Form MGT-14 (if required):**
1. **Resolution Filing:** - If the allotment requires a special resolution (e.g., allotment of shares beyond authorized capital), file **Form MGT-14** for passing the resolution with ROC.
### **Share Transfer Procedure**
**1. ** **Preparation of Transfer Documents:**
1. **Transfer Deed:** - Prepare a **Share Transfer Deed** (Form SH-4) which includes details such as the name of the transferor, transferee, number of shares transferred, and the consideration for the transfer.
2. **Share Certificates:** - The transferor should return the share certificates to the company along with the share transfer deed.
**2. ** **Board Meeting to Approve Transfer:**
1. **Approval of Transfer:** - Convene a board meeting to approve the transfer of shares. The board must pass a resolution approving the transfer, subject to the provisions of the Articles of Association.
2. **Update Register of Members:** - Update the **Register of Members** to reflect the new shareholder and the change in ownership.
**3. ** **Issue New Share Certificates:**
1. **New Certificates:** - After the transfer is approved, issue new share certificates in the name of the transferee and cancel the old certificates held by the transferor.
2. **Enter Transfer Details:** - Enter the details of the transfer in the **Register of Transfers** and in the Register of Members.
**4. ** **Filing with ROC:**
1. **Form SH-4:** - File **Form SH-4** (for transfer of shares) with ROC if required. This form must be filed within 30 days of the transfer of shares.
### **Detailed Procedure for Share Allotment and Transfer**
**Share Allotment:**
1. **Board Meeting:** - Issue notices for the board meeting. - Discuss and resolve the allotment of shares. - Pass a resolution for share allotment.
2. **Allotment Letter:** - Prepare and send allotment letters to the allottees.
3. **File PAS-3:** - Fill and submit Form PAS-3 with ROC. - Attach required documents (resolution, allotment letters, proof of payment).
4. **Update Records:** - Update the Register of Members. - Issue and deliver share certificates.
5. **File MGT-14 (if applicable):** - Submit Form MGT-14 for any special resolutions related to allotment.
**Share Transfer:**
1. **Prepare Transfer Deed:** - Complete Form SH-4 with details of the transfer.
2. **Board Meeting:** - Convene a board meeting to approve the share transfer.
3. **Update Records:** - Update the Register of Members and the Register of Transfers. - Issue new share certificates to the transferee.
4. **File SH-4:** - Submit Form SH-4 with ROC, if required.
### **Additional Notes**
- **Articles of Association (AoA):** Ensure compliance with the company’s AoA regarding share transfers and allotments. - **Stamp Duty:** Pay the applicable stamp duty on the share transfer deed as per state regulations. - **Corporate Compliance:** Ensure adherence to all corporate governance and compliance requirements as per the Companies Act, 2013.
By following these procedures, you ensure that share allotments and transfers are conducted in accordance with the Companies Act, 2013, and properly documented for legal and regulatory purposes.
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