Dear Swarup
Pls find the details for transfer of shares
Transfer of Share Under Companies Act,1956
The one of the main Characteristics of the Public Company is that its shares are freely transferable however after analysis of Section 108 onward which are applicable for the transfer and transmission there is contradiction in the same which says that the Board may refuse to register. Lets see it in detail with simplified version hereinbelow.
Section 108(1) it says :
A company shall not register a transfer of shares in, or debentures of, the company, unless a proper instrument of transfer duly stamped and executed by or on behalf of the transferor and by or on behalf of the transferee and specifying the name, address and occupation, if any, of the transferee, has been delivered to the company along with the certificate relating to the shares or debentures, or if no such certificate is in existence, along with the letter of allotment of the shares or debentures: (This is as per Act)
However if the Article of the company empowers the Board then the Board apart from the above criteria, may refuse registration of share transfer. This now encroaches the characteristics of the transferability of shares.
However, the refusal must be made after giving a notice & reason thereof. However, this was not necessary and the board may refuse it without notice and reason prior to Amendment of 1988.
The transfer instrument must be presented to the Company for registration
1. in Case of Listed Shares at any time before the date on which the register of members is closed, as per law, or within twelve months from the date of presentation to Prescribed Authority (Usually ROC- who shall stamp or otherwise endorse thereon the date on which it is so presented before execution on the instrument by parties i.e Transferor or Transferee), whichever is latter;
2. in any other case i.e unlisted share, within two months from the date of such presentation.
Duly Stamped:
it means a proper value of stamp which can be either impressed or adhesive stamp.
Rate of the Stamp duty:
paise 25 for Rs.100 or part thereof, (Indian Stamp Act, 1988) on the Market Value of Consideration ( If shares are listed) or where the share is unlisted and the consideration can not be determined such as Gift then on the Nominal Value.
Transfer Instrument
1. Form 7B for Companies other than Charitable Company.
2. Form 7BB used for Section 25 of the Companies Act, 1956 i.e Companies with charitable object. Now, In the Companies Act 2013 Section 8 provide or deals with the Charitable Company.
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