Share sale by promoter of public limited company

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Is it legal for promoter shareholders of unlisted company to sell their shares at a substantially higher price than the book value of shares?

Replies (1)

There is no restriction under the Companies Act, 2013 on selling shares of an unlisted public company at a price above book value, as long as:

  • The shares are not subject to any lock-in or contractual restriction (e.g., shareholder agreement, investment agreement, etc.).

  • The Articles of Association do not impose pre-emptive rights or transfer restrictions requiring Board approval or offer to other shareholders first.

  • Proper transfer procedures under section 56 are followed (execution of share transfer form — SH-4, payment of stamp duty, updating of register of members, etc.).

Conclusion:
Under company law, sale above book value is perfectly fine — share price is a matter of mutual agreement between buyer and seller.


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