share transfer in a private limited company
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
13 August 2010
In a private limited company restricted by shares, if one shareholder wants to transfer his shares to another shareholder, can they do so without informing the company?
13 August 2010
SHARES TRANSFER IN A PRIVATE COMPANY
Restriction in Private company on the right to transfer its shares [Section 3(1)(iii)]
Section 3(1)(iii)(a) of the Companies Act, 1956 provides that the Articles of a private company shall restrict the right to transfer the company's shares. Normally 100% shareholding of a private company may be owned by a family or other private group.
Cases where Restriction on transfer not applicable
Restriction upon transfer of shares in private company not applicable in the following cases:—
(i) on the right of a member to transfer his/her shares to his/her representative(s).
(ii) in the event of death of a shareholder, legal representatives may require the registration of share in his/her name.
Procedure for transfer of shares of private company
Transfer of shares in a private company is governed by AOA. Some steps followed by a private company to give effect to the transfer of shares are as follows:—
(i) Transferor should give a notice in writing to the company for his intention to transfer his share.
(ii) The company in turn notify to other members as regards the availability of shares and the price at which such share would be available to them along with the time limit within which they should communicate their option to purchase shares on transfer.
(iii) Such price is generally determined by the directors or the auditors of the company.
If none of the members comes forward to purchase shares then the shares can be transferred to an outsider and the company will have no option, other than to accept the transfer.
Valuation of share for the purpose of transfer of shares of a private company
Normally Articles of a private company contain provisions in this regard and provides that the shares are to be sold at a fair price determined by directors or the company's auditors.
Restriction in Private company on the right to transfer its shares [Section 3(1)(iii)]
Section 3(1)(iii)(a) of the Companies Act, 1956 provides that the Articles of a private company shall restrict the right to transfer the company's shares. Normally 100% shareholding of a private company may be owned by a family or other private group.
Cases where Restriction on transfer not applicable
Restriction upon transfer of shares in private company not applicable in the following cases:—
(i) on the right of a member to transfer his/her shares to his/her representative(s).
(ii) in the event of death of a shareholder, legal representatives may require the registration of share in his/her name.
Procedure for transfer of shares of private company
Transfer of shares in a private company is governed by AOA. Some steps followed by a private company to give effect to the transfer of shares are as follows:—
(i) Transferor should give a notice in writing to the company for his intention to transfer his share.
(ii) The company in turn notify to other members as regards the availability of shares and the price at which such share would be available to them along with the time limit within which they should communicate their option to purchase shares on transfer.
(iii) Such price is generally determined by the directors or the auditors of the company.
If none of the members comes forward to purchase shares then the shares can be transferred to an outsider and the company will have no option, other than to accept the transfer.
Valuation of share for the purpose of transfer of shares of a private company
Normally Articles of a private company contain provisions in this regard and provides that the shares are to be sold at a fair price determined by directors or the company's auditors.
13 August 2010
For more details kindly check my article available at the link mentioned below:
https://www.caclubindia.com/articles/transfer-of-shares-procedural-analysis-4692.asp
https://www.caclubindia.com/articles/transfer-of-shares-procedural-analysis-4692.asp
Message likes :
2 times
18 September 2010
Without the approval of the Board it is not possible to transfer shares since in the case of private ltd co's the right to transfer share is by law restricted.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Section 54F - Exemption on LTCG in 2026 for HP purchased in 2023
- STCG....................................................
- TAN for Partnership
- Treatment of Pension ?annuity returns on PMVY
- AMOUNT RECEIVED UNDER COMPULOSRY ACQUISITION OF AGRICULTURAL LAND
- Last year TDS Claim
- AY 26-27 ITR-4 FILING U/S 44-ADA
- Plot of land. Cost of Acquisition
- LTCG for Assmt year 26-27
- Long Term Service award taxability in hands of company
- Gst invoice numbering and delivery challan numbering
- Standard Deduction claim for EPFO Pension and ICICI Prudential Life Annuity
- Small dealers gst returns filing
- Sales amount in Gstr1
- CG after sale of flat
- E Commerce GSTR1 & 3B how to file
- GST Cancellation without jurisdiction
- Legal Opinion on Registrar's Refusal to Investigate a Society for Non-Renewal and Non-Compliance
- GST Refund_RFD-01
- Form10BD was uploaded successfully without any Error but after 24 hours, Form10BE are not available
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
