Transfer of shares

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

26 April 2012 HELLO...

IN ONE PRIVATE LIMITED COMPANY, SHARES ARE TRANSFERED AND CONSIDERATION IS NOT YET RECEIVED BY TRANSFEROR EVEN AFTER ONE YEAR NOW. SO WHETHER THAT TRANSFER IS VALID?

PLEASE CAN ANYONE TELL ME THAT WHAT IS THE TIME LIMIT WITHIN WHICH CONSIDERATION SHOULD BE PAID TO THE TRANSFEROR BY TRANSFREE?

ALSO NOW WHAT ARE THE REMEDIES AVAILABLE TO THE TRANSFEROR?

Ajay Mishra

Ajay Mishra (Expert)
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26 April 2012 Hi

For valid transfer consideration should be paid by transferee on the basis of which stamp duty for transfer is decided. Companies Act, 1956 only says that instrument of transfer should be properly executed. it is no talking about whether consideration received or not. it is party internal matter.

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.
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)].

Querist : Anonymous

Querist : Anonymous (Querist)

27 April 2012 OK SIR.

BUT NOW IN OUR CASE ALL PROCEDURAL ASPECTS OF TRANSFER OF SHARES WERE FOLLOWED AS PER THE PROVISIONS OF COMPANIES ACT AND NOW TRANSFEREE IS DENYING TO PAY THE REMAINING AMOUNT WHICH IS HALF OF THE TOTAL CONSIDERATION WHICH WAS DECIDED.
NOW WHAT REMEDIES ARE AVAILABLE TO THE TRANSFROR?

Querist : Anonymous

Querist : Anonymous (Querist)

27 April 2012 SIR ALSO SUGGEST ME THAT WHETHER TRANSFEROR CAN FILE CLB PETITION TO PROVE TRANSFER AS INVALID?

Ajay Mishra

Ajay Mishra (Expert)
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27 April 2012 Hi

Without consent of transferor how it is possible that transfer has been made.

After transfer and registering name of the transferee, firstly he made letter to company.

Regards

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