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Transfer of Shares

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Transfer of Shares in a Company

Share is a movable property that is freely transferrable by the owner of shares (Shareholder). Shares in a public limited company are freely transferable. In case of a private company, transfer of shares is subject to restriction in the Articles of the Company.

Transfer of Shares – Different Situations

a. Transfer among existing shareholders

b. Transfer to new persons

c. Transfer from resident Indians to non-resident or non-resident to resident

d. Transmission of shares

Transmission of Shares

Transmission happens in case of death of a shareholder. In that case, his/her shares will be vested with legal heirs as per the Will of the deceased shareholder. If there is no Will, the transmission of shares shall have to be carried out applicable succession laws. The board can then effect transmission of shares subject to receipt of documents such as Death Certificate, Will, Succession Certificate or Legal heirship certificate etc.

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Overview - Transfer 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. The transferee then submits the transfer deed stamped along with share certificate to the company for effecting the transfer.

Pre-requisites of Share Transfer

1. Shareholder must have the valid Share Certificate issued by the Company duly stamped and signed.

2. Execution of transfer deed by the transferor and transferee,

3. Compliance of provision in Articles, if any

4. Stamping of transfer deed according to the value of consideration, and

5. Submission of Transfer Deed and Share Certificates to Company for effecting share transfer.

Procedure at Company

1. On receipt of duly executed and stamped share transfer deed and supporting share certificates, the company to convene a board meeting to consider the share transfer.

2. If all requirements are satisfied, the board shall approve transfer.

3. The Register of Members to be updated with details of share transfer

4. Issue of share certificates to the transferee after endorsement of transfer.

Transmission of Shares

Transmission happens in case of death of a shareholder. In that case, his/her shares will be vested with legal heirs as per the Will of the deceased shareholder. If there is no Will, the transmission of shares shall have to be carried out applicable succession laws. The board can then effect transmission of shares subject to receipt of documents such as Death Certificate, Will, Succession Certificate or Legal heirship certificate etc.


1. 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.

2. 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.

3. 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.

4. What is share transfer deed?

Share Transfer Deed must be in Form SH-4 as per the Companies Act 2013.

5. 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.

6. What is the stamping required for transfer of shares?

Stamp duty is payable at Rs.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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