Transfer of shares

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CA Kruti Shah (Querist)
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22 October 2012 What is the procedure of transfer of shares of a deceased member of a Private Limited Co. to other existing members? (There is a written Will)

Ajay Mishra

Ajay Mishra (Expert)
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22 October 2012 Hi

Requirement of documents/evidence for transmission of shares
Where title of shares comes to vest in another person by operation of law, it is not necessary to execute and submit transfer deed. A simple application to the company by a legal representative along with the following necessary evidence is sufficient:-
1. Certified copy of death certificate
2. Succession certificate
3. Probate
4. Specimen signature of the successor.
However the requirement of these certificate is not essential and depends on various circumstances of the case. Where the succession certificate has been granted in respect of shares, the company can not insist on the production of probate or letter of administration, the certificate affords full indemnity to company.{Thenappa Chettiar v. Indian Overseas Bank Ltd.(1943)}

Section 108(1) of the Act states that nothing in section 108 shall prejudice any power of the company to register as holder of shares or debentures any person to whom the right to any shares in, or debentures of, the company has been transmitted by operation of law. It is not necessary to have any instrument of transfer executed for the purpose of transmission of shares.
Where title to the shares comes to vest in another person by operation of law, it is not necessary to submit transfer form. [Life Insurance Corpn. of India v Bokaro & Ramgur Ltd. (1966) 36 Comp Cas 490 (Del].
The procedure provided under sections 108 to 111 is not applicable to transmission of shares by order of a Court. [Hanuman Mills (P) Ltd., In re (1977) 47 Comp Cas 644 (All)].

However, Regulation Nos. 25 to 28 of Table A in Schedule I to the Act contains some regulations dealing with transmission of shares which are generally found in the Articles of most companies. On registration of the transmission of shares, the person entitled to such transmission becomes the shareholder of the company and enjoys all rights and liabilities of a shareholder.

CA Kruti Shah

CA Kruti Shah (Querist)
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06 November 2012 Thank you sir

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