Share Transfer

Share Transfer refers to the process of transferring ownership of shares in a company from an existing shareholder (transferor) to a new shareholder (transferee). This process allows shareholders to sell, gift, or otherwise convey their equity in the company while complying with statutory regulations and the company’s Articles of Association.

The process is governed by Sections 56 and 58 of the Companies Act, 2013, which outline the procedure, rights of shareholders, and obligations of the company. Share transfer can occur in both private and public limited companies, subject to restrictions in the Articles of Association or shareholder agreements.

Key steps in the share transfer process include:

• Execution of Share Transfer Deed: A formal deed signed by both the transferor and transferee specifying the number of shares, consideration, and transfer date.

• Board Approval: The company’s board of directors approves the transfer in accordance with the Articles of Association.

• Updating Share Register: The company updates its register of members to reflect the new ownership.

• Issuance of Share Certificates: Canceling old share certificates and issuing new certificates in the name of the transferee.

• Stamp Duty Payment: Paying applicable stamp duty on the transfer deed as per state laws.

Proper execution of share transfers ensures legal recognition of ownership, clarity in shareholder rights, and compliance with regulatory requirements. It also safeguards the company against disputes and facilitates smooth business operations.

In conclusion, Share Transfer is a critical corporate procedure that ensures lawful transfer of equity, maintains accurate records, and upholds the rights and obligations of shareholders.