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BUYING SHARES FROM A SHAREHOLDER

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anita

trainee

514 Points Posted on 03 October 2022

If a director wants to buy shares from another shareholder of a private company what will be the minimum price at which he can buy ? the book value as per the last balance sheet or some additions are to be made?

Will the formalities change if the transfer is between two shareholders ?

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Quick Summary

This discussion clarifies the process and minimum pricing for a director purchasing shares from another shareholder in a private company. The transfer follows procedures outlined in the company's Articles of Association and Section 56 of the Companies Act, 2013. The share price is determined by Rule 11UA of the Income Tax Rules, 1962, and the formalities remain consistent whether the transaction is between a director and shareholder or between two shareholders.

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The Transferor and Transferee shall follow the process as detailed in the Company's Articles of Association read with Section 56 of the Companies Act, 2013. The consideration shall be fixed in accordance with Rule 11UA of the Income Tax Rules, 1962. The formalities shall be the same regardless.