Share transfer of unlisted public company
This query is : Resolved
04 October 2011
Dear Experts,
As per Companies Act, public limited company should have seven shareholders. The Company is unlisted company. It has sold all its shares to the new shareholders.
Now how to show the transfers? Can in annual return all shares can be shown as transfered to new seven shareholders.
What should be the procedure where all seven promoters are selling their shares to new seven shareholders.
Is there any need of shareholder agreement.
Please reply to my query.
As per Companies Act, public limited company should have seven shareholders. The Company is unlisted company. It has sold all its shares to the new shareholders.
Now how to show the transfers? Can in annual return all shares can be shown as transfered to new seven shareholders.
What should be the procedure where all seven promoters are selling their shares to new seven shareholders.
Is there any need of shareholder agreement.
Please reply to my query.
05 October 2011
Dear Girija,
To make effect of transfer you should record the transfer in form 7B in case of shares are held in physical. The Form 7B is authentication for the transfer. There is no need to made an agreement. you can show the transfer in the e-Form 20B vide the Schedule V attachment.
To make effect of transfer you should record the transfer in form 7B in case of shares are held in physical. The Form 7B is authentication for the transfer. There is no need to made an agreement. you can show the transfer in the e-Form 20B vide the Schedule V attachment.
05 October 2011
Thanks Mr. vignesh.
Its true that that to record transfer the transfer has to be recorded in share transfer form 7B and the same has to be shown in e-form 20B.
Its total sale of ownership of the Company to new members.
My query is that when the company sells the share to new shareholders, will the minimum membership criteria is affected?
Can all transfers be shown on same date?
Can we show against existing seven shareholders transfer to new shareholders?
Its true that that to record transfer the transfer has to be recorded in share transfer form 7B and the same has to be shown in e-form 20B.
Its total sale of ownership of the Company to new members.
My query is that when the company sells the share to new shareholders, will the minimum membership criteria is affected?
Can all transfers be shown on same date?
Can we show against existing seven shareholders transfer to new shareholders?
05 October 2011
Dear Girija
Firstly I will Suggest you should definitely enter in to a Agreement.in future there may be some complications..Some specific points to be mentioned in that agreement as.... for your ready reference I mentioning here:
1.The transfer or is transferring shares with free consent and all the terms have been understood by the transfer or.
2. Indemnity clause by transfer or, Guarantee clause by transefror, physical share certificate transefror ,director ship change and all.....Draft Minutes Accordingly...
the other issue look, When Director in meeting approve the transfers that time ttransfer complete.....Director are Different from Shareholder....
I hope you have understood the Whole issue....
But Be cautious ,,Only 7 BB is not Sufficient
Firstly I will Suggest you should definitely enter in to a Agreement.in future there may be some complications..Some specific points to be mentioned in that agreement as.... for your ready reference I mentioning here:
1.The transfer or is transferring shares with free consent and all the terms have been understood by the transfer or.
2. Indemnity clause by transfer or, Guarantee clause by transefror, physical share certificate transefror ,director ship change and all.....Draft Minutes Accordingly...
the other issue look, When Director in meeting approve the transfers that time ttransfer complete.....Director are Different from Shareholder....
I hope you have understood the Whole issue....
But Be cautious ,,Only 7 BB is not Sufficient
05 October 2011
Thanks Mr. Arora,
Sir, the Company is unlisted public company.Further as required there are seven members as per the Act.
The face value of shares is Rs.10/- As in the month of September,2011 the shares are being are transferred to new shareholders at the rate of Rs.40/-.
Now can there be total transfer of shares to new members.
Or can we show that new seven shareholders have subscribed to shares at the rate of Rs.10/- and later the existing shares are transferred to new shareholders at the rate of Rs.40/-
Or can the transfer be shown on different dates and accordingly register the Share transfer form.
Kindly reply.
Sir, the Company is unlisted public company.Further as required there are seven members as per the Act.
The face value of shares is Rs.10/- As in the month of September,2011 the shares are being are transferred to new shareholders at the rate of Rs.40/-.
Now can there be total transfer of shares to new members.
Or can we show that new seven shareholders have subscribed to shares at the rate of Rs.10/- and later the existing shares are transferred to new shareholders at the rate of Rs.40/-
Or can the transfer be shown on different dates and accordingly register the Share transfer form.
Kindly reply.
25 July 2025
Here’s a detailed explanation to your queries regarding share transfer of an unlisted public company, especially when all shares of existing seven shareholders are transferred to new seven shareholders:
1. Minimum Membership and Share Transfer
As per the Companies Act, a public limited company must have a minimum of seven shareholders at all times.
Since you are transferring shares from existing seven shareholders to new seven shareholders, the minimum membership criterion will not be affected, provided the transfer is complete and reflected simultaneously.
The company must maintain at least seven shareholders in its register post-transfer.
2. Showing Transfers in Annual Return (Form 20B)
You can show all share transfers in the Annual Return (e-Form 20B) under Schedule V (Shareholding Pattern).
All transfers can be shown on the same date if the transfers are completed simultaneously.
The transfer should be reflected as transfers from existing seven shareholders to new seven shareholders.
3. Procedure for Transfer
If shares are in physical form, transfer deeds (Form SH-4) must be executed by transferors and transferees.
The company must record each transfer by entering details in the Register of Members and issue new share certificates.
Form 7B is a share transfer form used as an authorization from the company for the transfer, certifying the transfer has been registered.
The Board of Directors must approve the transfers in a board meeting and record minutes accordingly.
Transfer registration and share certificate issuance must be done as per law.
4. Share Subscription vs Share Transfer
You asked if the new shareholders can be shown as subscribers to shares at Rs. 10 face value, and then the existing shares transferred at Rs. 40.
This can be done if:
New shareholders subscribe to new shares at Rs. 10 (fresh issuance).
Then, existing shareholders transfer their shares at Rs. 40.
These are two separate transactions:
Issue of new shares (fresh subscription) - requires board and possibly shareholders’ approval, filings with ROC.
Transfer of existing shares - requires execution of transfer deed and approval by board.
5. Can transfers be shown on different dates?
Yes, share transfers can be shown on different dates if they happen at different times.
But in your case, since all shares are transferring from existing seven shareholders to new seven shareholders, it is cleaner and preferable to do it on the same date to maintain the minimum number of shareholders.
6. Is Shareholder Agreement Necessary?
A Shareholders Agreement is not mandatory legally but is highly recommended.
It protects rights, sets out terms of transfer, indemnity, dispute resolution, etc.
Especially important when entire ownership changes hands to avoid future conflicts.
Summary:
Query Answer
Minimum membership affected? No, if transfer keeps 7 shareholders
All transfers on same date? Preferable and possible
Show transfers in Annual Return? Yes, in Form 20B Schedule V
Need Shareholders Agreement? Not mandatory but recommended
Transfer vs Subscription? Both can happen separately
1. Minimum Membership and Share Transfer
As per the Companies Act, a public limited company must have a minimum of seven shareholders at all times.
Since you are transferring shares from existing seven shareholders to new seven shareholders, the minimum membership criterion will not be affected, provided the transfer is complete and reflected simultaneously.
The company must maintain at least seven shareholders in its register post-transfer.
2. Showing Transfers in Annual Return (Form 20B)
You can show all share transfers in the Annual Return (e-Form 20B) under Schedule V (Shareholding Pattern).
All transfers can be shown on the same date if the transfers are completed simultaneously.
The transfer should be reflected as transfers from existing seven shareholders to new seven shareholders.
3. Procedure for Transfer
If shares are in physical form, transfer deeds (Form SH-4) must be executed by transferors and transferees.
The company must record each transfer by entering details in the Register of Members and issue new share certificates.
Form 7B is a share transfer form used as an authorization from the company for the transfer, certifying the transfer has been registered.
The Board of Directors must approve the transfers in a board meeting and record minutes accordingly.
Transfer registration and share certificate issuance must be done as per law.
4. Share Subscription vs Share Transfer
You asked if the new shareholders can be shown as subscribers to shares at Rs. 10 face value, and then the existing shares transferred at Rs. 40.
This can be done if:
New shareholders subscribe to new shares at Rs. 10 (fresh issuance).
Then, existing shareholders transfer their shares at Rs. 40.
These are two separate transactions:
Issue of new shares (fresh subscription) - requires board and possibly shareholders’ approval, filings with ROC.
Transfer of existing shares - requires execution of transfer deed and approval by board.
5. Can transfers be shown on different dates?
Yes, share transfers can be shown on different dates if they happen at different times.
But in your case, since all shares are transferring from existing seven shareholders to new seven shareholders, it is cleaner and preferable to do it on the same date to maintain the minimum number of shareholders.
6. Is Shareholder Agreement Necessary?
A Shareholders Agreement is not mandatory legally but is highly recommended.
It protects rights, sets out terms of transfer, indemnity, dispute resolution, etc.
Especially important when entire ownership changes hands to avoid future conflicts.
Summary:
Query Answer
Minimum membership affected? No, if transfer keeps 7 shareholders
All transfers on same date? Preferable and possible
Show transfers in Annual Return? Yes, in Form 20B Schedule V
Need Shareholders Agreement? Not mandatory but recommended
Transfer vs Subscription? Both can happen separately
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