{"id":670,"date":"2019-10-12T10:00:34","date_gmt":"2019-10-12T10:00:34","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=670"},"modified":"2021-03-17T16:03:53","modified_gmt":"2021-03-17T10:33:53","slug":"transfer-and-transmission-of-securities","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/transfer-and-transmission-of-securities\/","title":{"rendered":"Transfer and Transmission of Securities \u2013 Procedure of Transfer, Time Limits, and Penalties"},"content":{"rendered":"\n<p class=\"has-drop-cap\">The Shares of an individual inside a company are transferable which facilitates the company in acquiring permanent capital and liquidate investments into the shareholders. But there are some constraints under which the securities are transferred. They are transferable by the acts mentioned in the&nbsp;Articles of Association&nbsp;(AOA) of the company under which the private companies are restricted. Here in this article, we will see in detail the meaning, procedures for the transfer and transmission of securities, the time limits, and its penalties.<\/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\/transfer-and-transmission-of-securities\/#What_is_meant_by_the_Transfer_of_Securities\" >What is meant\nby the Transfer of Securities?<\/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\/transfer-and-transmission-of-securities\/#Who_all_are_involved_in_the_Transfer_of_Shares\" >Who all are\ninvolved in the Transfer of Shares?<\/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\/transfer-and-transmission-of-securities\/#Which_law_states_about_the_Transfer_of_Shares\" >Which law\nstates about the Transfer of Shares?<\/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\/transfer-and-transmission-of-securities\/#Basic_Procedure_for_the_Transmission_of_Share\" >Basic Procedure for the\nTransmission of Share<\/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\/transfer-and-transmission-of-securities\/#What_are_the_differences_between_Transfer_of_Shares_and_Transmission_of_Shares\" >What are the\ndifferences between Transfer of Shares and Transmission of Shares?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/transfer-and-transmission-of-securities\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_meant_by_the_Transfer_of_Securities\"><\/span>What is meant\nby the Transfer of Securities?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>It is basically handing over the rights and duties of a member of the company to any other person who wishes to become a member of the company. It is a voluntary act of a member that is accompanied according to the articles mentioned in the <a href=\"https:\/\/corpbiz.io\/learning\/alteration-in-article-of-association\/\"><strong>AOA of the company<\/strong><\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Who_all_are_involved_in_the_Transfer_of_Shares\"><\/span>Who all are\ninvolved in the Transfer of Shares?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul><li>Legal Representatives in case of deceased or if the concerned person is insolvent.<\/li><li>Subscribers to the Memorandum<\/li><li>Transferor<\/li><li>Transferee<\/li><li>Listed or Unlisted Company<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Which_law_states_about_the_Transfer_of_Shares\"><\/span>Which law\nstates about the Transfer of Shares?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>According to Section 56 of the&nbsp;<strong>Companies Act, 2013<\/strong><a rel=\"noreferrer noopener\" href=\"http:\/\/www.mca.gov.in\/Ministry\/pdf\/CompaniesAct2013.pdf\" target=\"_blank\"><sup>[1]<\/sup><\/a>, securities are movable property and are transferred in a manner provides by the articles mentioned in the AOA of the company. A Shareholder is free to transfer shares to a person of his own choice, whereas shares in a Private Limited company are not freely transferable.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Procedure for\nTransfer of Shares<\/h3>\n\n\n\n<ul><li>At first, the deeds which are transferred need to be obtained in the      prescribed form i.e., SH-4.<\/li><li>There are some circumstances in which the instrument of transfer may not be in the prescribed form. These are:<\/li><li>Under Section 187 of the Companies Act, 2013, when a Director or nominee transfers shares on behalf of another body incorporate.<\/li><li>In case, the Director or nominee transfers shares on behalf of a corporation owned or controlled by the Central or state government.<\/li><li>Shares transferred by way of deposit for repayment of any loan or advance if the deposit is made with any of the following banks:<ul><li>State Bank Of India<\/li><li>Any Scheduled bank<\/li><li>Any other Banking Company<\/li><li>Financial Institution<\/li><li>Central Government<\/li><li>Any Corporation held by the Central or State Government. Government<\/li><li>State Government<\/li><li>Trustees.<\/li><\/ul><\/li><\/ul>\n\n\n\n<ul><li>While for transferring of the Debentures, a standard format is used as the Instrument of Share.<\/li><\/ul>\n\n\n\n<ul><li>According to the provisions of the Companies Act, 2013, you need to get AOA in case of shares, trust deed in case of Debentures where the transfer deed is registered either by the transferor and the transferee.<\/li><li>According to the provisions of the Indian Stamp Act, the transfer deed should need to have stamps. The present stamp duty rate of transfer of share is 25 paisa for every One Thousand rupees of the value of the share.<\/li><li>The Stamp deed on the transfer deed is checked whether it is cancelled after the time or before the signing of the transfer deed.<\/li><li>The person who has given his signature, name, and address as approval of transfer must verify that the transferor and transferee have signed the share\/ debentures transfer deed.<\/li><li>The relevant share or debenture certificate or allotment letter, along with the transfer deed, must be attached and sent to the company.<\/li><li>If the application made by the transferor is for partly paid shares, the      company has to notify the amount due on shares\/ debentures of the      transferee. In addition to this, a no Objection Certificate is required      within two weeks from the date of receipt.<\/li><li>The same value stamp is affixed on the written application if the signed transfer deed has lost. Here, the Board may register the transfer on the grounds of indemnity.<\/li><li>In case the shares of the company are listed in a recognized stock exchange, then the company cannot charge any fee for the registration of transfer of shares and debentures. <\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Time Limits<\/h3>\n\n\n\n<p><strong><em>There are certain time limits under which transfer and transmission of\nsecurities takes place.<\/em><\/strong><\/p>\n\n\n\n<ul><li>A company shall not register the transfer of securities of the company other than the beneficial owners without a proper instrument of transfer. The time prescribed is 60 days from the date of execution.<\/li><li>Application by the transferor: The transfer shall not be registered until the company gives notice of the application to the transferor. Here, the transferee gives NOC (No Objection Certificate) within two weeks from the receipt of the notice.<\/li><li>The Company has to deliver certificates of all securities allotted,      transferred and transmitted in the following cases within the following mentioned time limits:<\/li><\/ul>\n\n\n\n<table class=\"table table-bordered\"><tbody><tr><td>\n  Subscribers to Memorandum\n  <\/td><td>\n  Within 2 months from the date of incorporation\n  <\/td><\/tr><tr><td>\n  Allotment of any of its shares\n  <\/td><td>\n  Within a period of 2 months from the allotment date.\n  <\/td><\/tr><tr><td>\n  Intimation of transmission`\n  <\/td><td>\n  Within a period of 1 month from the date of receipt.\n  <\/td><\/tr><tr><td>\n  Allotment of Debenture\n  <\/td><td>\n  Within a period of 6 months from the date of allotment.\n  <\/td><\/tr><\/tbody><\/table>\n\n\n\n<h3 class=\"wp-block-heading\">Penalties<\/h3>\n\n\n\n<p>There is a\nminimum plenty of Rs 25000 and a maximum of Rs 5 lakh in case of a company. And\nFor an officer the minimum amount is Rs 10000 and maximum of Rs 1 lakh.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Transmission of Securities<\/h3>\n\n\n\n<p>Transmission of Securities is quite different from the Transfer of Securities, but many of us think these two terms as the same. Here, the shares are transferred to the deceased and the official assignee of the insolvent. Transmission of shares is an automatic process when the shareholder dies and immediately passes to the personal representative or if a member is declared bankrupt.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Basic_Procedure_for_the_Transmission_of_Share\"><\/span>Basic Procedure for the\nTransmission of Share<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>Following\nsteps shall be followed for the transmission of shares<\/em><\/strong><\/p>\n\n\n\n<ul><li>In the case of joint holding or legal heir, the survivor who wants transmission by operation of law needs to file a simple application with the company. Relevant documents such as Death certificate, succession Certificate, probate, etc. need to be attached to the application.<\/li><li>Thereafter, the company records the information about the death certificate, and a reference number of recording is given to the shareholder.<\/li><li>After the documents are submitted, the company reviews these documents and approve the transmission request in case the documents are in order.<\/li><li>In case the documents submitted with the transmission request are not in order, the company shall communicate refusal to the concerned person within 30 days.<\/li><li>Before the death of the shareholder, the dividend declared will be payable to the legal representative, and in case after the death of the shareholder, the dividend will be paid to him only after the registration of his\/her name.<\/li><li>Implementation of transfer deed is not mandatory for transmission of shares. Application of transmission together with appropriate      documents shall be sufficient the request of valid transmission.<\/li><\/ul>\n\n\n\n<p><strong>Probate<\/strong> : If a member of a company leaves after him a letter of administration or a will then after his death the survivors shall get a copy of \u2018will\u2019 which is certified with the competent Court\u2019s of jurisdiction seal. Thus, this will\u2019s certified copy is called a \u2018probate\u2019. There is no requirement of Succession certificate when letter of administration and probate is issued.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_are_the_differences_between_Transfer_of_Shares_and_Transmission_of_Shares\"><\/span>What are the\ndifferences between Transfer of Shares and Transmission of Shares?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Transfer of Shares and Transmission of Shares are often taken in a similar way but there is difference between these two terms. Let\u2019s see the Comparison Chart:<\/p>\n\n\n\n<table class=\"table table-bordered\"><tbody><tr><td>\n  <strong>Comparison Basis<\/strong>\n  <\/td><td>\n  <strong>Transfer of Shares<\/strong>\n  <\/td><td>\n  <strong>Transmission of Shares<\/strong>\n  <\/td><\/tr><tr><td>\n  Definition\n  <\/td><td>\n  Transfer of share voluntarily from one party to another.\n  <\/td><td>\n  Transmission of shares takes place by the operation of law in case the\n  member of the company is not alive or has become insolvent.\n  <\/td><\/tr><tr><td>\n  Reason for the transfer or transmission\n  <\/td><td>\n  It\u2019s a voluntary decision of the member of the company.\n  <\/td><td>\n  In case if insolvency, death or inheritance of the member.\n  <\/td><\/tr><tr><td>\n  Initiated by\n  <\/td><td>\n  Transferor or Transferee\n  <\/td><td>\n  Legal heir or receiver\n  <\/td><\/tr><tr><td>\n  Liability\n  <\/td><td>\n  The liabilities of transferor cease on the completion of transfer.\n  <\/td><td>\n  Original liability of shares continues to exist.\n  <\/td><\/tr><\/tbody><\/table>\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>Transfer and transmission of Securities are two different things that are often confused by the non-technical people. These are the ordinary course of transferring property, but in the transmission of shares take place in case the member of the company is not alive or has become insolvent. Moreover, the transfer of shares is more common than the transmission of shares.<\/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\/moa-and-aoa-why-they-are-vital-to-setup-an-institution\/\">MOA and AOA: Why They Are Vital To Setup an Institution\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Shares of an individual inside a company are transferable which facilitates the company in acquiring permanent capital and liquidate investments into the shareholders. But there are some constraints under which the securities are transferred. They are transferable by the acts mentioned in the&nbsp;Articles of Association&nbsp;(AOA) of the company under which the private companies are [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":677,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[160],"tags":[125],"acf":{"service_id":"321"},"authorName":"Shalini Singh","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2019\/09\/MEE.jpeg","authorDescription":"Shalini is a B.tech graduate but her keen interest in writing impelled her to continue as a content writer. Further, She has a rich experience in Companies Act and Ammendment related topics.","postViews":44273,"readingTime":5,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/670"}],"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\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=670"}],"version-history":[{"count":34,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/670\/revisions"}],"predecessor-version":[{"id":27644,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/670\/revisions\/27644"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/677"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=670"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=670"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=670"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}