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Share Transfer

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Transfer of Shares

Shares in a company are freely transferable. In case of a private company, transfer of shares is subject to reasonable restriction in the Articles of the Company. The transfer of shares may fall under the following categories:

    1. Transfer among existing shareholders
    2. Transfer to new persons
    3. Transfer from resident Indians to non-resident or non-resident to resident
    4. Transmission of shares

In a public company, shares are freely transferable. However, in a private company, there can be restrictions for share transfer as per the Articles. Before the transfer of shares, one must look into the provision of articles regarding restrictions. Usually, the provisions in the articles mandate that the shares must be offered to existing shareholders. After satisfying these requirements, shares can be transferred by executing a share transfer deed (Form 7B available from stock exchanges). The transferee then submits the transfer deed stamped along with share certificate to the company for effecting the transfer.

The other case is transmission of shares. It happens in case of death of a shareholder. In that case, his/her shares will be vested with legal heirs. The board can then execute transfer to legal heirs subject to documentation, etc.


  1. Compliance of provision in Articles, if any,
  2. Execution of transfer deed  by the transferor and transferee,
  3. Stamping of transfer deed according to the value of consideration, and
  4. Collating required documents for transmission of shares.


  1. Convene a board meeting to consider the share transfer,
  2. If all requirements are satisfied, approve transfer by a resolution,
  3. Prepare the minutes of the meeting and get the process/documents vetted by professionals with CS / CA / CWA degrees,
  4. Update the transfer of shares in the members register, and
  5. Hand over the share certificates to the transferee after endorsement of transfer.

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Share transfer of a company need to be in accordance with articles of a company. Majority of articles of private limited company mandate fist offer to existing shareholders. Usually, private companies articles contain restrictions in line with co-founders agreement.

It is always advisable to get professional assistance before invoking transfer of shares in a private company.

What is transfer of shares?

Transfer of shares means changes in ownership of shares of a company from one person to another. This happen by sale or gift of shares.

What is transmission of shares?

Transmission of shares means the process of transmitting the ownership of shares to the legal heirs of a shareholder, consequent to the death of a shareholder.

Who can transfer shares in a company and how does the shares transfer process happen?

An existing shareholder can transfer shares held in a company; however, he/she needs to study the articles of the company before effecting the transfer. The transferor and transferee have to execute the transfer deed and get the deed stamped as per the required stamping regulations and then submit the same to the company with respective share certificate for effecting the transfer. It is the responsibility of the board of directors to transfer the shares and deliver the certificate to the transferee.

What is share transfer deed?

Share Transfer Deed must be in Form SH4 as per the Companies Act. The transfer deed is available with stock exchanges.

Who issue the transfer deed?

Now transfer deed can be prepared prescribed as per in the Companies (Share Capital and Debentures) Rules 2014

What is the validity of the share transfer deed?

In case of listed companies, the transfer deed is valid for 12 months from the date of presentation (date of seal of the designated authority) or the first book closure date after the presentation whichever is later. In case of unlisted companies (including private limited companies) the transfer deed is valid for 2 months from the date of presentation.

Any filing required for share transfer?

Share transfer does not require any registry filings. The details of shares transfer will be reflected in the subsequent Annual Returns; thus, the details will be updated in the ROC records.

What is the stamping required for transfer of shares?

Stamp duty is payable at Re. 0.25 per consideration of Rs.100 for transfer of shares. Share transfer stamp duty is paid through 'Share Transfer Stamps'.

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