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Validity of share transfer deed/form ?

CA Himanshu Bansal (Risk Manager) (2345 Points)

27 April 2012

For how much time is the share transfer deed valid from the date of its execution ?

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19 Replies

(Guest)

After execution they are valid forever. There is no time limit.

CA Himanshu Bansal (Risk Manager) (2345 Points)
Replied 27 April 2012

Isnt it like that it should be submitted to company for initiating transfer within a timefrane when it is signed by both transferor and transferee?

Shridhi Jain (Company Secretary) (1678 Points)
Replied 27 April 2012

as per section 108, share transfer deed is valid for two months in case of pvt ltd. co. n non listed pub co.

and for listed co. , it is valid for 12 months or book closure date, whichever is later.

Different views are welcome.

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(Guest)

True, validity of share transfer deed In the case of listed company, is at any time before the date on which the register of members is closed, in accordance with law, for the first time after the date of the presentation of the prescribed form to the prescribed authority under clause (a) of section 108(1A) or within twelve months from the date of such presentation, whichever is later.

In any other case, within two months from the date of such presentation.

But once share transfer form is executed by both the transferor and transferee complete in all respected then issue of validity lapse. After execution they are valid forever. We can send the deeds to the company for transfer of shares even after say 5 years.

(Guest)

Originally posted by : Himanshu Bansal
	Isnt it like that it should be submitted to company for initiating transfer within a timefrane when it is signed by both transferor and transferee?

Dear Himanshu, Time limit of validity of share transfer form is for execution of deeds. Time limit does not mean it should be submitted to the company within validity period. I trust now demarcation is clear to you.

NIRAJ GOEL (PROP.) (107 Points)
Replied 27 April 2012

Dear neha

kindly update that Mr. A holding 10 shares in pvt. ltd. he executed share transfer deed in favour of Mr. B 5 years back, but do not send to Company for trasnfer.

Mr. A will continue be member in Company record.

I remember some instance when we submiited share transfer deed to roc for extension of time. Roc charges some money and extended the time. kindly guide us in case wrong. In my view there is time period.

(Guest)

Originally posted by : NIRAJ GOEL
	Dear neha kindly update that Mr. A holding 10 shares in pvt. ltd. he executed share transfer deed in favour of Mr. B 5 years back, but do not send to Company for trasnfer. Mr. A will continue be member in Company record. I remember some instance when we submiited share transfer deed to roc for extension of time. Roc charges some money and extended the time. kindly guide us in case wrong. In my view there is time period.

Dear Niraj, Yes, you are right time period is there for validity of deeds and in case we are not able to execute the deeds timely then extension is sought from ROC. In the example elaborated by you, there is no need to get extension from ROC since execution of deeds is within validity of deeds. There is no need to send the deeds to company for transfer in your favor withing validity of deeds. You are very well submit them whenever you desire, as per your convenience. Thanks

NIRAJ GOEL (PROP.) (107 Points)
Replied 27 April 2012

dear madam

execution means : enter all details+ get sign by both parties + one witness sign. affix stamp duty + attach share certificate.

its new point to me, many thanks

manoj kumar sethi (chartered accountants) (24 Points)
Replied 27 April 2012

The Shares of Limited Companies Can be got transferred with in a period of 12 months or the date of book closure whichever is earlier. If after execution of tranfer deed by transferor the transferee does not get it transferred within this time limit then the validity of the deed can be extended by ROC only.

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(Guest)

Originally posted by : manoj kumar sethi
	The Shares of Limited Companies Can be got transferred with in a period of 12 months or the date of book closure whichever is earlier. If after execution of tranfer deed by transferor the transferee does not get it transferred within this time limit then the validity of the deed can be extended by ROC only.

The Shares of Limited Companies Can be got transferred with in a period of 12 months or the date of book closure whichever is LATER.

SUNIL KUMAR JAIN (PRACTISING COMPANY SECRETARY) (187 Points)
Replied 03 May 2012

Dear Neha,

I have gone through the discussion on the validity period of Share Transfer Form. It appears that you have missed out some part of the Section 108. Time limit is not only on execution of transfer deed but also on the period of delivery of the duly executed share transfer deed to the company.Please read Section 108 [(1A) (b)which states :

" every instrument of transfer in the prescribed form with the date of such presentation stamped or otherwise endorsed thereon shall, after it is executed by or on behalf of the transferor and the transferee and completed in all other respects, be delivered to the company:-

(i)..x....x....x

(ii) in any other case, within two months from the date of such presentation.

What I state above is the law on the matter under discussion.Please have your views accordingly.

With Regards,

Sunil K Jain,

Practising Company Secretary;

9810104162;skj13 @ rediffmail.com

2 Like

Ankur Garg (Company Secretary and Compliance Officer) (114773 Points)
Replied 04 May 2012

Originally posted by : Neha Jain
	But once share transfer form is executed by both the transferor and transferee complete in all respected then issue of validity lapse. After execution they are valid forever. We can send the deeds to the company for transfer of shares even after say 5 years.

This is indeed a wrong understanding Neha…Pl take note.

Learned member Sunil have already quoted the reason with section number and interpretation in his reply.

Somewhere I missed your reply otherwise I would have corrected your interpretation on the same day. Anyways it is ok…better late then never…

Duly executed share transfer deed should be submitted with the company with original time limit you have already mentioned. After expiry of time limit no company would accept your duly signed and stamped share transfer deed.

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Ajay Mishra (Company Secretary) (74332 Points)
Replied 04 May 2012

Validity of transfer deed:

In the case of shares dealt in or quoted on a recognised stock exchange, at any time before the date on which the register of members is closed, in accordance with law, for the first time after the date of the presentation of the prescribed form to the prescribed authority under clause (a) of section 108(1A) or within twelve months from the date of such presentation, whichever is later. In any other case, within two months from the date of such presentation.

Period specified in sub-section (1A) is not applicable in the following cases in terms of sub-section (1C):

(1) Where a nominee of company 'A' is appointed a director in company 'B' and where such nominee is required to hold 'qualification shares' in the latter company, in terms of section 49 company 'A' may transfer the required number of shares held by it in company 'B' in the name of the said nominee. At the same time company 'A' will keep with itself a blank transfer form duly signed by the nominee. When the company 'A' decides that the shares will not be held in the name of the nominee, the company shall indicate on the instrument the date when it so decides and the instrument duly executed and stamped will be forwarded to the company 'B' for transferring the shares to the company 'A'. In this case the period within which the instrument shall be delivered to the company will not apply.

(2) The same procedure will be followed where the holding company transfers a share to a nominee in order to ensure that the number of members in its subsidiary does not fall below two in case the latter is a private company or below seven if it is a public company. When the holding company decides to retransfer the shares in it name, it will indicate such date on the blank transfer form held by it and deliver the deed duly executed to the subsidiary. Here also the period of delivering an instrument to the company as per section 108(1A) will not apply.

In so far as sub-section (1C) is concerned, if the transfer of shares falls within any one of the exempted cases mentioned in that sub-section, the requirements as to presentation of the instrument of transfer in favour of the prescribed authority and delivery thereof to the company within the prescribed time limit, as contemplated in sub-section (1A) are not applicable, provided the conditions stipulated in sub-section (1C) are satisfied. In view of the same, if any bank or financial institution or the Central Government or a State Government or any corporation owned or controlled by the Central Government or a State Government, granting a loan against the security of shares, intends to get such shares registered in its own name, in the event of failure on the part of the borrower to repay the loan amount, it shall complete the instrument of transfer and lodge it with the company for registration of the transfer in its own name. In such a circumstance, they will have to stamp or otherwise endorse on the instrument of transfer the date on which the bank or financial institutions decides to get such share registered in its own name and the instrument so stamped or endorsed will have to be delivered to the company, together with the share certificate, for registration within two months from the date so stamped or endorsed. [Dove Investments P. Ltd. v Gujarat Industrial Investment Corpn. Ltd. (2005) 60 SCL 604 (MAD)].

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(Guest)

Thanks all the members for correcting me. I am indeed very grateful to Mr. Sunil, Mr. Ankur and Mr. Ajay for correcting my interpretation.

I had once read, we tend to miss immaterial things and always focus on the major aspects which in turn leads us not to understand crux of any statement. When it comes to observation all aspects should be given equal weighage and attention. So true it is, I can feel it now.