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Transfer of shares of pvt. co.

ravi (senior accountant) (507 Points)

09 November 2011

pls Suggest the procedure for transfer of shares in pvt. ltd co. steps to be taken and resolutions to be passed and any ROC filings needed?

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Balaji (Articled assistant & CA final) (117 Points)
Replied 10 November 2011

Section 3(1)(iii)(a) provides that a private company must restrict the right to transfer its shares by its Articles. This provision does not prohibit the right to transfer shares absolutely but ensures that such transfer of shares is made in accordance with the conditions and restrictions laid down in the Articles of the private company. One of the conditions is that such transfer should not result in the increase of members beyond fifty, excluding present and past employees. There may be other conditions in the Articles which are to be strictly followed besides those contained in section 108 while transferring the shares of a private company.
Shares in a private company are usually transferred by private agreement between the seller and the buyer, as shares in a private company may not by law be offered to the general public. A stock transfer form is required to register the transfer with the company.
Make an application to the Board giving details of the proposed transfer, that is, the number of shares, consideration
Fill up the transfer form in Form No. 7B duly giving the number and amount of shares and the name, address and occupation of the transferor and transferee of the shares comprising in the certificate.
Get the signature, full name and address of two witnesses in the above transfer form and the signature of transferor(s) and transferees(s).
Put the date of transfer on the transfer form and see that the date so given is within two months of the date endorsed by the prescribed authority.
Affix stamp on the transfer form as required under the Indian Stamp Act and as applicable in the State in which the registered office of the private company is situated.
And the Board will approve such transfer and pass the resolution approving the transfer of shares in the private company.

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