Transfer of shares of private limited co. to a foreign co.
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
11 May 2013
Dear All,
Pls help me with this.
Pls help me with the procedure to transfer shares from a private limited company to a foreign company as per companies act. Any specific procedure to be followed?
Pls help me with this.
Pls help me with the procedure to transfer shares from a private limited company to a foreign company as per companies act. Any specific procedure to be followed?
23 June 2013
Hi
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)].
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)].
23 June 2013
DETAILS REQUIRED FOR TRANSFER OF SHARES
1. Following details of Buyer
• Name
• Address
• Telephone No.
• Fax
• E mail
2. Following details of Seller
• Name
• Address
• Telephone No.
• Fax
• E mail
3. Bank Details of Seller
• Bank Name
• Branch Name
• Address
• Type of A/c
• A/c No.
• MICR Code
• SWIFT CODE
• Beneficiary Bank Transit No. (ABA No.)
• Intermediary Bank Details ( If the funds are routed through an Intermediary Bank by the Remitter’s Bank if Remitter’s bank does not have a branch in India)
4. Photo ID proof of Buyer required. Proof like driving license, Passport copy etc the details must tally as to what has been given in the FCTRS form
5. Purpose for which the Seller is receiving the Funds
6. If the seller / Buyer is other than Individual then following details required
• Type of Constitution
• Date and place of incorporation
7. Particulars of earlier RBI / FIPB approvals if any
8. Details of Proposed Transfer like
• Date of Transfer
• No of shares
• Face value
• Negotiated price (Certified by CA)
• Amount of consideration
9. Foreign Investments in the company - No of shares % of holding
• Before Transfer
• After Transfer
10. If unlisted company, price as per valuation guidelines certified by CA.
11. If the Buyer is a Corporate then
• Board Resolution for buying / purchasing the shares
• Board Resolution to Authorise Director(s) to sign on behalf of the Company
• Signature of the Director(s) authorised to sign on behalf of the Company to be attested by another Director(s)
• Board Resolution to be signed by a Director(s) other than the one authorized by the Board to sign documents relating to Transfer on behalf of the Company
• Identity proof of the following which clearly has his photograph, name and signature as given in the board resolution
Director authorized to sign the documents on behalf of the company
Director signing the Board Resolution
1. Following details of Buyer
• Name
• Address
• Telephone No.
• Fax
• E mail
2. Following details of Seller
• Name
• Address
• Telephone No.
• Fax
• E mail
3. Bank Details of Seller
• Bank Name
• Branch Name
• Address
• Type of A/c
• A/c No.
• MICR Code
• SWIFT CODE
• Beneficiary Bank Transit No. (ABA No.)
• Intermediary Bank Details ( If the funds are routed through an Intermediary Bank by the Remitter’s Bank if Remitter’s bank does not have a branch in India)
4. Photo ID proof of Buyer required. Proof like driving license, Passport copy etc the details must tally as to what has been given in the FCTRS form
5. Purpose for which the Seller is receiving the Funds
6. If the seller / Buyer is other than Individual then following details required
• Type of Constitution
• Date and place of incorporation
7. Particulars of earlier RBI / FIPB approvals if any
8. Details of Proposed Transfer like
• Date of Transfer
• No of shares
• Face value
• Negotiated price (Certified by CA)
• Amount of consideration
9. Foreign Investments in the company - No of shares % of holding
• Before Transfer
• After Transfer
10. If unlisted company, price as per valuation guidelines certified by CA.
11. If the Buyer is a Corporate then
• Board Resolution for buying / purchasing the shares
• Board Resolution to Authorise Director(s) to sign on behalf of the Company
• Signature of the Director(s) authorised to sign on behalf of the Company to be attested by another Director(s)
• Board Resolution to be signed by a Director(s) other than the one authorized by the Board to sign documents relating to Transfer on behalf of the Company
• Identity proof of the following which clearly has his photograph, name and signature as given in the board resolution
Director authorized to sign the documents on behalf of the company
Director signing the Board Resolution
23 June 2013
In Addition you will read the Master Circular issued by RBI on FDI. This circular given the details of registration procedure of shares transfer.
23 June 2013
PROCEDURE FOR TRANSFER OF SHARES FROM RESIDENT INDIVIDUAL TO NON RESIDENT INDIVIDUAL
1. Request letter for initial approval along with the documents to be submitted to Authorised Dealer (A D ) - Bank authorized to deal in Forex
• Form FC TRS to be prepared - four copies, 3 original signed copies to be submitted to AD Branch and one office copy.
• To be signed by Buyer. Duly authorized agent can also sign the declaration – Power of Attorney copy to be enclosed.
• Consent Letter from Buyer
• Consent Letter from Seller
• Shareholding pattern of the investee company after the acquisition of shares by a person resident outside India showing equity participation of residents and non-residents category-wise (i.e. NRIs/OCBs/foreign nationals/incorporated non-resident entities/FIIs) and its percentage of paid up capital, where the sectoral cap/limits have been prescribed.
• Certificate indicating fair value of shares from a Chartered Accountant.
• Copy of Broker's note if sale is made on Stock Exchange
• Undertaking from the buyer to the effect that he is eligible to acquire shares/convertible debentures under FDI policy and the existing sectoral limits and Pricing Guidelines have been complied with.
• Undertaking from the FII/sub account to the effect that the individual FII/ Sub account ceiling as prescribed by SEBI has not been breached.
2. Approval to be received from A D
3. On receipt of approval from A D funds for purchase of shares will be remitted through normal banking channels.
4. Buyer will approach the investee company to record the transfer in their books along with the certificate in the Form FC-TRS from the AD Branch that the remittances have been received by the transferor / seller.
5. On receipt of the certificate from the AD, the company may record the transfer in its Books.
1. Request letter for initial approval along with the documents to be submitted to Authorised Dealer (A D ) - Bank authorized to deal in Forex
• Form FC TRS to be prepared - four copies, 3 original signed copies to be submitted to AD Branch and one office copy.
• To be signed by Buyer. Duly authorized agent can also sign the declaration – Power of Attorney copy to be enclosed.
• Consent Letter from Buyer
• Consent Letter from Seller
• Shareholding pattern of the investee company after the acquisition of shares by a person resident outside India showing equity participation of residents and non-residents category-wise (i.e. NRIs/OCBs/foreign nationals/incorporated non-resident entities/FIIs) and its percentage of paid up capital, where the sectoral cap/limits have been prescribed.
• Certificate indicating fair value of shares from a Chartered Accountant.
• Copy of Broker's note if sale is made on Stock Exchange
• Undertaking from the buyer to the effect that he is eligible to acquire shares/convertible debentures under FDI policy and the existing sectoral limits and Pricing Guidelines have been complied with.
• Undertaking from the FII/sub account to the effect that the individual FII/ Sub account ceiling as prescribed by SEBI has not been breached.
2. Approval to be received from A D
3. On receipt of approval from A D funds for purchase of shares will be remitted through normal banking channels.
4. Buyer will approach the investee company to record the transfer in their books along with the certificate in the Form FC-TRS from the AD Branch that the remittances have been received by the transferor / seller.
5. On receipt of the certificate from the AD, the company may record the transfer in its Books.
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