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.