Stamp duty
Querist : Anonymous
I am a Chennai registered company, holding shares in a company holding land. Now I would like to transfer the shares held in the land company to an Limited Liability Partnership (LLP). So can someone please explain:
1) What will be the stamp duty implication on this.
2) What all formalities are required to execute this procedure.
Regards.
Querist : Anonymous
Querist : Anonymous
### 1) Stamp Duty Implications
* **Share Transfer Stamp Duty**:
When transferring shares (even from a company to an LLP), stamp duty is typically payable on the share transfer instrument.
* **Rate**:
In Tamil Nadu (Chennai), the stamp duty on share transfer is generally **0.1% to 0.25%** of the market value or face value of shares, whichever is higher.
* **Important**: Since you’re transferring shares held in a company owning land, the valuation might attract attention, and stamp duty could be based on the fair market value.
* **LLP Aspect**: LLPs are treated differently from companies. Shares in LLPs are called “parts” or “units.” The transfer will be governed by LLP agreement terms. Stamp duty on the LLP agreement or share transfer will be as per the state rules for LLP instruments.
### 2) Formalities to Execute the Transfer
* **Company Side**:
* Board Resolution approving transfer of shares.
* Share Transfer Deed (Stamp duty paid as above).
* Update Register of Members and issue new Share Certificates.
* File necessary forms with Registrar of Companies (ROC) such as PAS-3 (Return of Allotment or Transfer).
* **LLP Side**:
* LLP agreement may need to be amended to reflect new partner’s admission (if applicable).
* Stamp duty payment on LLP agreement (if applicable).
* File Form 2 and Form 3 with LLP registrar for change in LLP partners.
* **Additional**: Since shares represent interest in a land-holding company, it’s advisable to get a **valuation report** and ensure all tax implications (like capital gains tax) are also considered.
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