transferability of shares of a PVT Ltd. Co.

This query is : Resolved

Mohit (Querist)
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12 August 2008 there are two companies A(Ltd) & B(Pvt. Ltd) both have same promoter X. Company A have made investment in the shares of B. During the year A sells the shares of B to X. Is this Transferability allowed by company law as the main characteristic of PVT Ltd. is non transferability of shares.

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
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13 August 2008 What does the clause relating to transfer in the AOA say?

Mohit

Mohit (Querist)
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18 August 2008 DOES IT MATTERS IF THE AOA OF PVT COMPANY ALLOWS THE TRANSFERABILITY OF SHARES?

Srinath A. N.

Srinath A. N. (Expert)
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19 August 2008 Under Sec.3(1)(iii)(a) of the Companies Act, 1956, restrict the transferability of shares of the Private Company and not prohibits. The transfer said by you is absolutely valid subject to approval of Board of Directors of Company B.

The Board shaould approve the transfers, since shares of private Companies are not freely transferble.

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