Share transfer procedure

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Querist : Anonymous

Querist : Anonymous (Querist)

19 November 2013 If shares of pvt ltd Company are transferred to members of Building(Sty members).What procedure exactly needs to be followed. plz Guide

Ajay Mishra

Ajay Mishra (Expert)
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19 November 2013
PROCEDURE FOR TRANSFER OF SHARES OF PRIVATE COMPANY

Generally articles contain the detailed provisions as regards the procedure for transfer of shares. Usually following steps shall be followed by a private company to give effect to the transfer of shares:—
(i) Transferor should give a notice in writing for his intention to transfer his share to the company.
(ii) The company in turn should notify to other members as regards the availability of shares and the price at which such share would be available to them.
(iii) Such price is generally determined by the directors or the auditors of the company.
(iv) The company should also intimate to the members, the time limit within which they should communicate their option to purchase shares on transfer.
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.
(V) the transferor will submit the following documents with company:
(a) Original Share certificate
(b) Transfer deed (Form-7B) properly executed with stamp duty of proper amount.
© any other documents relating thereto.

It is to be noted that any transfer of shares to an outsider without complying with the procedure as specified in the articles for effecting transfer of shares will not be operative against the company. Even in the case where the procedure prescribed by the articles was not followed and such failure was not due to any fault on the part of the selling shareholder, the transfer to an outsider was held not to be effective.

Transfer of shares without consent of holder of shares and without prior sanction of board of directors as required under articles of association of a private company concerned could not be held to be valid. [John Tinson Co. (P) Ltd. v Mrs. Surjeet Malhan (1997) 88 Comp Cas 750 (SC)].

Ajay Mishra

Ajay Mishra (Expert)
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19 November 2013
Procedure for Transfer of shares of the Company:

1. After receiving Transfer Deed(Instrument of Transfer), Share Certificate and other documents, if any.
2. Check all documents is proper and eligible to register for transfer.
3. Call Board Meeting
4. At Board Meeting register the Transfer and made entry in the Register of Members and Register of Transfer.
5. Return the Share Certificate after making entry of transfer therein within 2 months.
6. Make entry in the minutes of Board Meeting.
7. The detail of Transfer from last AGM till the date of AGM should be submitted in Annual Return to ROC in Form-20B.

Querist : Anonymous

Querist : Anonymous (Querist)

19 November 2013 But shares are not getting transferred to company but members of building then still the procedure is same.

Ajay Mishra

Ajay Mishra (Expert)
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19 November 2013 Yes, the procedure will be same.

Querist : Anonymous

Querist : Anonymous (Querist)

21 November 2013 thanku sir

Querist : Anonymous

Querist : Anonymous (Querist)

21 November 2013 can body let m know how price of share for buyback can be calculated plz

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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25 July 2025 Price of Share for Buyback — Key Points
Maximum Buyback Price
The company can buy back shares at a price not exceeding the price approved by its Board of Directors or shareholders (in case shareholder approval is required).

Pricing Methods (As per Companies Act, 2013 and SEBI Regulations):

Average Market Price:
The buyback price can be the average market price of the shares during the last 2 weeks or 4 weeks (as applicable) before the board meeting or the public announcement.

Negotiated Price:
In some cases, the company may fix a negotiated price based on a valuation report from a registered valuer.

Offer Price in Case of Open Market Buyback:
The company announces a fixed price or a price band in the public announcement.

Valuation Report
For buyback under certain conditions, the company must obtain a valuation report from a registered valuer to justify the buyback price.

Regulatory Limits
The buyback price cannot exceed the limits prescribed by:

Companies Act, 2013 (Section 68)

SEBI (Buyback of Securities) Regulations, 2018 (for listed companies)

Practical Approaches
Commonly, companies calculate buyback price based on:

Recent market price of shares on stock exchanges (if listed)

Net Asset Value (NAV) per share

Book value of shares

Earnings per share (EPS) and other financial indicators

Valuation by an independent registered valuer

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