In how many ways we can transfer shares without consideration ?
Is gift is the only one ?
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Transfer of shares without consideration
Replies (1)
Transfer of share is one kind of contract So we need to look into the Indian Contract Act,1872.
As you specifically mentioned,Transfer of shares or Contract without consideration is covered by Section 25 Of Indian Contract Act,1872 which reads as follows.
An agreement made without consideration is void, unless-
(1) it is expressed in writing and registered under the law for the time being in force for the registration of 1*[documents], and is made on account of natural love and affection between parties standing in a, near relation to each other ; or unless
(2) it is a promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, or something which the promisor was legally compellable to do ; or unless
(3) it is a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorized in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits.
In any of these cases, such an agreement is a contract.
Explanation 1.-Nothing in this section shall affect the validity, as between the donor and donee, of any gift actually made.
Explanation 2.-An agreement to which the consent of the promisor is freely given is not void merely because the consideration is inadequate ; but the inadequacy of the consideration may be taken into account by the Court in determining the question whether the consent of the promisor was freely given.
By reading this section,prima facie,we come to know that gift is the only form in which we can transfer shares without consideration.
But,as per Expalanation 2 to Section 25 there are still two other forms in which the shares can be transferred without consideration which are 1)Inheritance & 2)Will
But in all three cases as per sub-section (1) of section 25,we need to register documents.
Hope you have got your answer and still if you have any query then you can send at my E-mail.
As you specifically mentioned,Transfer of shares or Contract without consideration is covered by Section 25 Of Indian Contract Act,1872 which reads as follows.
An agreement made without consideration is void, unless-
(1) it is expressed in writing and registered under the law for the time being in force for the registration of 1*[documents], and is made on account of natural love and affection between parties standing in a, near relation to each other ; or unless
(2) it is a promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, or something which the promisor was legally compellable to do ; or unless
(3) it is a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorized in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits.
In any of these cases, such an agreement is a contract.
Explanation 1.-Nothing in this section shall affect the validity, as between the donor and donee, of any gift actually made.
Explanation 2.-An agreement to which the consent of the promisor is freely given is not void merely because the consideration is inadequate ; but the inadequacy of the consideration may be taken into account by the Court in determining the question whether the consent of the promisor was freely given.
By reading this section,prima facie,we come to know that gift is the only form in which we can transfer shares without consideration.
But,as per Expalanation 2 to Section 25 there are still two other forms in which the shares can be transferred without consideration which are 1)Inheritance & 2)Will
But in all three cases as per sub-section (1) of section 25,we need to register documents.
Hope you have got your answer and still if you have any query then you can send at my E-mail.
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