Share transfer of company limited by shares

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Querist : Anonymous

Querist : Anonymous (Querist)

03 June 2013 KINDLY ADVICE ME REGARDING THE PROCEDURE TO BE FOLLOWED WHILE SHARES OF A COMPANY LIMITED BY SHARES, TRANSFER BY ONE SHAREHOLDER TO ANOTHER, OUT OF LOVE AND AFFECTION.
WHICH DOCUMENTS REQUIRED, WHAT WILL BE THE DATE OF TRANSFER DEED, VALIDITY OF TRANSFER DEED, AMOUNT OF STAMP VALUE ?
WITH REGARDS

Querist : Anonymous

Querist : Anonymous (Querist)

03 June 2013 THX FOR YOUR ADVICE

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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25 July 2025 Sure! Here’s a clear guide on the procedure for transferring shares of a company limited by shares from one shareholder to another out of love and affection:

1. Procedure for Share Transfer by Love and Affection
Share Transfer Deed:
The transferor (seller) and transferee (buyer) must execute a Share Transfer Deed (Form SH-4), which is the legally recognized document for transferring shares.

Date of Transfer Deed:
The date on the deed should be the actual date on which the transfer is executed.

Documents Required:

The executed Share Transfer Deed (Form SH-4) signed by both parties

Original Share Certificate(s)

Board Resolution of the transferee accepting the shares (if applicable)

Indemnity or affidavit if required by the company’s Articles of Association

Stamp Duty:

The stamp duty on share transfer depends on the state where the transfer deed is executed.

Typically, for transfer by gift (love and affection), stamp duty is levied as per the market value of shares or nominal value, whichever is higher.

Rates vary by state, but usually range between 0.25% to 0.5% of the share value.

Since it’s a transfer out of love and affection (gift), some states provide concessional or nil stamp duty—check your local Stamp Act or consult the Registrar of Companies (ROC).

2. Validity of the Transfer Deed
The transfer deed remains valid as long as it is properly executed, duly stamped, and accepted by the company.

The company’s Board of Directors must approve the transfer (except in the case of public companies with free transferability), and update the Register of Members accordingly.

The transfer is complete only after the company records the transfer in its Register of Members and issues a new share certificate to the transferee.

3. Additional Points
If shares are being transferred as a gift (love and affection), no consideration is involved. The transfer deed should clearly state the gift nature to avoid confusion.

For gift transfers, the recipient should also consider gift tax implications if applicable.

The transferor must surrender the old share certificates to the company.

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