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Transfer of shares to other than a director in a pvt ltd

Ashish (prop) (67 Points)

15 May 2011

Can a director transfer is 20% share to a person who is not a director in such company?

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4 Replies

J. Manivannan (Advocate & IP) (242 Points)
Replied 15 May 2011

Dear Ashish

Kindly check your AoA of the company, is there any restriction on transfer of shares, if not, you can be transfer the shares to a person who are not a director or existing member.

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Ashish (prop) (67 Points)
Replied 15 May 2011

Thanks,

What is the procedure and which complieance I have to follow for this?

Priya Sharma (Company Secretary & Student.MBA) (998 Points)
Replied 18 May 2011

In case yours is a Private Company, there is restirction on transfer of shares under section 3(i)(iii) of te Companies Act, 1956.

shivnath tripathi (Partner) (22 Points)
Replied 19 May 2011

Originally posted by : Ashish
	Can a director transfer is 20% share to a person who is not a director in such company?

In case of a private company,AOA can contain any restriction on transfer of shares as agreed between shareholders or some of them and company,since restriction on share transfer is one of the major defining criteria of private limited company under the provisions of Section 3 of the Companies Act.Section 111 of the Act is applicable to public company and subject to provisions of this Section,the Shares or debentures and any interest therein shall be freely transferable.Waiving the right of free transferability of shares in public company has no specific prohibition under Section 111A of the Act, a public company by its articles can restrict and regulate transfer of its shares and the article may reflect voluntary waiver of rights to transfer of shares through shareholders agreement.

Therefore it is concluded that AOA of the company regulates transferability of shares and the AOA can be amended as to requirements and needs arising time to time.