share transfer query

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dipti t morajkar (Querist)
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06 October 2010 Mr X is having some physical shares in his name, holding it singly. Now Mr X wants to hold the share jointly with his Son.

Please answer following:-

1) Will it be transfer made by share transfer form. If yes, what will be the consideration ?

2) If no, how will the change in name be made effective.

3) Will there be any Income tax issues

4) Comments/ remarks/ any other issue arising out of the transaction.

Thanks,
Dipti Parab

Aditya Maheshwari

Aditya Maheshwari (Expert)
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06 October 2010 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.

Valuation for consideration for transfer of shares of a private company
Usually, Articles of a private company provides that the shares are to be sold under pre-emption clause at a fair price determined by directors or the company's auditors. It may also be provided that the fair price would be certified by the company's auditors.

If the pre-emption clause requires that the shares are required to be offered to other members at a price certified by the directors or auditors, the Courts are not in a position to enquire into the correctness of valuation, unless there is evidence that valuation was not correctly made. If the person who made the valuation has acted negligently and failed to take into account all the necessary factors for arriving at the value of shares, in such case the transferor may sue for damages to the person who made the valuation for difference between the value of the share, as computed by the valuer, and the real value of shares.
The Company Law Board/Tribunal ordinarily do not interfere with the valuation made by experts. Therefore, if valuation is challenged then there must be sufficient evidence in support to show that valuation is improper.

and visit this link also
https://www.caclubindia.com/articles/transfer-of-shares-procedural-analysis-4692.asp

dipti t morajkar

dipti t morajkar (Querist)
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07 October 2010 Hi Aditya Sir,

the query is that Mr. X is not transferring his shares but he want to hold them jointly with his son.
Its obviously not a transfer and nor it be called as transmission.
So how it can be effected in company records?

Aditya Maheshwari

Aditya Maheshwari (Expert)
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07 October 2010 It would be transfer of shares only as the name of the shares being held is being changed as per the change above.

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