{"id":38930,"date":"2021-12-25T11:51:54","date_gmt":"2021-12-25T06:21:54","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=38930"},"modified":"2021-12-25T11:51:56","modified_gmt":"2021-12-25T06:21:56","slug":"share-transfer-underlining-key-facts-and-legalities","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/share-transfer-underlining-key-facts-and-legalities\/","title":{"rendered":"Share Transfer: Underlining Key Facts and Legalities"},"content":{"rendered":"\n<p class=\"has-drop-cap\">The share transfer is an important characteristic of any registered company. Shares or debentures are movable property and thus can be transferred under certain conditions cited under AoA.<\/p>\n\n\n\n<p>The securities transfer is possible via\nany arrangement or contract between two or more individuals. The Company Act\nhas provisions that deal with the transferability of securities. Transmission\nof securities implies the title loss on such securities due to succession, demise,\ninheritance, bankruptcy, etc. It is something other than transfer.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/share-transfer-underlining-key-facts-and-legalities\/#What_is_the_Meaning_and_Significance_of_Share_Transfer\" >What\nis the Meaning and Significance of Share Transfer?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/share-transfer-underlining-key-facts-and-legalities\/#Parities_engaged_in_the_Share_transfer_process\" >Parities\nengaged in the Share transfer process<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/share-transfer-underlining-key-facts-and-legalities\/#Process_of_share_transfer_as_per_the_Companies_Act_2013\" >Process\nof share transfer as per the Companies Act, 2013<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/share-transfer-underlining-key-facts-and-legalities\/#Time_Limits_for_facilitating_certificate_for_share_allotment\" >Time\nLimits for facilitating certificate for share allotment<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/share-transfer-underlining-key-facts-and-legalities\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_Meaning_and_Significance_of_Share_Transfer\"><\/span>What\nis the Meaning and Significance of Share Transfer? <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Transfer of shares implies the voluntary\ntransfer of the duties and rights of the company&#8217;s member as represented in a\ncompany&#8217;s share. The concept of share transfer comes to light when the\nshareholder voluntary wants to pass its shares to another individual who wants\nto become a member of the company in question.<\/p>\n\n\n\n<p>Therefore, shares are transferable like\nother movable property without any expressed restrictions listed under the AoA.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Parities_engaged_in_the_Share_transfer_process\"><\/span>Parities\nengaged in the Share transfer process<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>Subscribers to the memorandum<\/li><li>Legal Representative, in case of a deceased<\/li><li>Transferee<\/li><li>Transferor<\/li><li>Company (whether listed\/ unlisted)<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Process_of_share_transfer_as_per_the_Companies_Act_2013\"><\/span>Process\nof share transfer as per the Companies Act, 2013<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>According to the Companies Act, 2013, the transfer of shares takes place in the following manner:<\/em><\/strong><\/p>\n\n\n\n<ul><li>Preparation of transfer deed is the first step in the share transfer process. For this purpose, the transferor needs to secure the Form, namely Form SH-4, endorsed by the regulating authority.<\/li><li>The said Form may lack the inclusion of transfer&#8217;s instrument, particularly in the given scenarios;<\/li><\/ul>\n\n\n\n<p>Where the director or nominee hands over\nthe shares on behalf of another body corporate u\/s 187 of the Company Act,\n2013;<\/p>\n\n\n\n<p>Where a director or nominee hands over\nshares behalf of a corporation controlled or owned by the state or central\ngovernment;<\/p>\n\n\n\n<p><strong><em>Shares transferred via a deposit as a repayment&#8217;s security of any advance or loan if they are made with any of the following:<\/em><\/strong><\/p>\n\n\n\n<ul><li>State Bank of India; or<\/li><li>Any scheduled bank; or<\/li><li>Any other banking company; or<\/li><li>State Government; or<\/li><li>Central Government; or<\/li><li>Any corporation working under Central or <strong><em>State Government<\/em><\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/State_government\"><strong><em>[1]<\/em><\/strong><\/a><\/sup>; or<\/li><li>Trustees who have filed the declarations<\/li><\/ul>\n\n\n\n<p><strong><em>For debenture transfer, a standard format\ncan be utilized as the transfer&#8217;s instrument.<\/em><\/strong><\/p>\n\n\n\n<ul><li>Secure\nthe AoA in case of shares; meanwhile, in case of debentures, utilize trust\ndeed. The transfer deed, in such a case, should be registered by one of the\nparties involved in the transfer.<\/li><li>As\nper the India Stamp Act &amp; stamp duty notification in force, the transfer\ndeed must enclose stamps. Presently, the stamp duty for share transfer is\ncapped at 25 paise\/100 pages of the share&#8217; value or part thereof.<\/li><li>Check\nthat the stamp on the transfer deed is cancelled at the time of or before\nsigning the transfer deed. <\/li><li>A\nperson who encloses his\/her signature, name, &amp; address as approval for\nshare transfer must witness the parties to the contract (i.e. transferor and the\ntransferee) sign the deed in person.<\/li><li>The\nrelevant share\/debenture certificate with a transfer deed must be aptly\nattached and sent to the company in question.<\/li><li>In\ncase the transferor files the application for partly paid shares, the company\nmust duly notify the sum due on shares\/debentures to the transferee. Besides, a\ntransferee&#8217;s NOC is required within two weeks from the date of receipt of the\naforesaid notification.<\/li><li>In\ncase of the transfer deed is misplaced or lost, make sure the affix the same\nvalue on the application. The board under such a scenario may register the\nshare transfer on certain indemnity&#8217;s terms as it thinks fit.<\/li><li>If\nthe company&#8217;s shares are listed on the stock exchange, then the company cannot\ncharge any amount as a fee for the registration of shares and debentures\ntransfer.<\/li><li>Note:\nA company cannot register a transfer relating to partly paid shares in the\nfollowing cases:<\/li><li>The\ntransferee has received the notice from the company in Form No. SH.<\/li><li>Till\nthe transferee has furnished a NOC to the transferor within two weeks from the\ndate of the receipt of the notice.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Time_Limits_for_facilitating_certificate_for_share_allotment\"><\/span>Time\nLimits for facilitating certificate for share allotment <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>A Company has share capital<\/em><\/strong>: The Company shall not register a\ntransfer of the company&#8217;s securities or member&#8217;s interest in the organization\nother than beneficial owners without apt instrument of transfer within 60 days\nfrom the execution date.<\/p>\n\n\n\n<p><strong><em>Application by transferor alone<\/em><\/strong><em>:<\/em> The transfer will not be registered until the company\nprompts notice of the application the transferor and the transferee gives a\nno-objection certificate within two weeks from receipt of the notice.<\/p>\n\n\n\n<p>The company shall confer certificates\nrelating to all securities allotted\/ transferred\/ transmitted in the given\ncircumtrances and within the given time limit: <\/p>\n\n\n\n<p><strong><em>In case of subscribers to MoA\u2013 within two\nmonths from the incorporation date.<\/em><\/strong><\/p>\n\n\n\n<p><strong><em>In case of allotment of shares \u2013 within\ntwo months from the allotment date.<\/em><\/strong><\/p>\n\n\n\n<p>Receipt by the entity of the instrument\nof transfer\/ intimation of transmission \u2013 within one month from the date of\nreceipt.<\/p>\n\n\n\n<p><strong><em>Allotment of debenture \u2013 within six\nmonths from the date of allotment.<\/em><\/strong><\/p>\n\n\n\n<p><strong><em>Penalties <\/em><\/strong><\/p>\n\n\n\n<ul><li>For the company \u2013 the Minimum is Rs. 25,000, and the maximum is Rs. 5,00,000.<\/li><li>For an officer In default \u2013 The minimum is Rs. 10,000, and the maximum is Rs. 1,00,000.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As you can see, the share transfer process isn&#8217;t as straightforward as it seems from the outset. It revolves around plenty of legalities, as mentioned above, to bring transfer into effect. Both transferor and transferee play a vital role in this context since they are the only party to the contract.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/transfer-and-transmission-of-securities\/\">Transfer and Transmission of Securities \u2013 Procedure of Transfer, Time Limits, and Penalties <\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The share transfer is an important characteristic of any registered company. Shares or debentures are movable property and thus can be transferred under certain conditions cited under AoA. The securities transfer is possible via any arrangement or contract between two or more individuals. The Company Act has provisions that deal with the transferability of securities. [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":38941,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[160],"tags":[2060],"acf":{"service_id":"227"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":3928,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/38930"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=38930"}],"version-history":[{"count":20,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/38930\/revisions"}],"predecessor-version":[{"id":38952,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/38930\/revisions\/38952"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/38941"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=38930"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=38930"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=38930"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}