9870310368 9810688945

Learning

Learning » Startup » Business Registrations » Transfer of Shares Under Companies Act 2013

Company Registration

Transfer of Shares Under Companies Act 2013

Narendra Kumar

| Updated: Aug 05, 2017 | Category: Business Registrations

Transfer of Shares

The provisions related to the transfer of shares are provided under Section 56 of the Companies Act 2013 and Rule 11 of Companies (share capital & Debentures) Rules 2014.

As per Section 56 of the Companies Act 2013, Company shall not register a transfer of shares of the company other than those persons whose name is mentioned in records of depository as beneficial interest holders.Unless a proper transfer instrument which is duly stamped, dated and executed by or on the behalf of transferor and transferee specifying the name, address, and occupation of the transferee deliver to the company by the transferor or transferee within a period of 60 days from the date of execution along with the certificate related to securities;

Provided that

  1. In the case of transfer, an instrument has been lost or not delivered within the prescribed time limit then in that case company may register transfer of shares on such terms as to indemnity as the board may think fit.
  2. Nothing in above mention subsection shall prejudice the power of the company to register on receipt of an intimation of transmission of any right to securities by operation of law from any person to whom such right has been transmitted.
  3. In case application related to the partly paid shares made by the transferor then transfer shall not be registered unless the company gives notice to the transferee and the transferee gives no objection to transfer to the company within two weeks from the date of receipt of the notice.
  4. The transfer of shares or other interest of a deceased person made by his legal representative shall be valid as if he had been the holder at the time of the execution of the instrument of transfer.
  5. Every company shall deliver the certificates of all securities allotted, transferred or transmitted unless prohibited by any provision of law or by the order of Court, Tribunal or other authority—
  • Within a period of two months from the date of incorporation, in case of subscribers to the memorandum of the company;
  • Within a period of two months from the date of allotment, in case of any allotment of any of its shares;
  • within a period of one month from the date of receipt of the transfer instrument by the company under sub-section (1) or, as the case may be, of the intimation of transmission under subsection (2), in the case of a transfer or transmission of securities;
  • Within a period of six months from the date of allotment in case of allotment of a debenture.

Rule 11 of Companies (Share Capital & Debentures) Rules 2014

  1. A share transfer instrument held in physical form shall be in form SH 4 and within 60 days from the date of execution of such share transfer instrument shall be delivered to the company.
  2. Before registering a transfer of partly paid shares, the company has to give notice in form SH-5 to the transferee and within two weeks from the date of receipt of the notice, transferor has to give no objection to the transfer.

Important Provisions related to Transfer of Shares

  • Share Transfer Instrument is Compulsory

As per Section 56 of the Companies Act 2013 provides that to register a transfer of shares by the company, Share transfer deed in Form SH 4 must be duly stamped and executed by or on the behalf of the transferor/transferee specifying the name, address and occupation of the transferee must be delivered to the company along with the certificate or in case of no certificate then letter of allotment of shares.

  • Time Period For Deposit of Instrument Transfer

A share transfer instrument in form SH 4 is required to be delivered to the company within 60 days from the date of such execution by or on the behalf of transferor and transferee.

  • Share Transfer Stamp

A share transfer stamp is to be affixed to the share transfer deed and stamp duty is 25 Paisa for every 100 Rs. or part thereof as per notification number SO 130 (E) issued by Ministry of Finance, New Delhi

  • Time period for issue of certificate

Every company within one month deliver the certificate of all shares transferred after the application for the registration of such transfer of securities has been received.

  • Private Company restricts the right to transfer its shares

According to Section 2(58) provides that the article of association of a private company shall restrict the right to transfer the company’s shares.

However, the restriction is not applicable in certain cases:

  1. Restriction on the right to transfer shares by the members do not apply in case where the shares are transferred to their representative;
  2. In a case of death of members, their legal representative may require the registration of such shares on the name of heirs.
  • Time Limit for Refusal of Registration of Transfer

Within 30 days from the date on which the intimation of transfer of a security is delivered, the company has the power to refuse to register the transfer of shares.

  • Appeal Against the Refusal of Registration of Transfer by Private Company

Share transferee has a right to appeal to tribunal against the refusal by the company to register transfer of shares within a period of 30 days from the date of the notice received from the company or in case of no notice has been received from the company then within a period of 60 days from the date on which the share transfer instrument delivered to the company.

  • Appeal Against the Refusal of Registration of Transfer by Public Company

Share transferee has a right to appeal to tribunal against the refusal by the company to register transfer of shares within a period of 60 days from the date of the notice received from the company or in case of no notice has been received from the company then within a period of 90 days from the date on which the share transfer instrument delivered to the company.

  • Penalty

In the case of non-compliance with the provisions of transfer of securities then the company shall be punishable by the fine which shall not be less than Rs. 25000, which may extend to Rs. 500000 an officer in default shall be punishable by the fine of not less than Rs.10000 and which may extend to Rs. 100000.

For more information click here or send us an email at info@enterslice.com. You can also call our customer support at +91 9069142028.

  • 341
  •  
  •  
  •  
  •  
  •  
  •  
  •  
  •  
    341
    Shares
Narendra Kumar

Experienced Finance and Legal Professional with 12+ Years of Experience in Legal, Finance, Fintech, Blockchain, and Revenue Management.

Business Plan Consultant


1 Comment

Leave a Reply

Request A Call Back

Are you human?: 1 + 2 =

Categories

Trending Articles

Hey I'm Suman. Let's Talk!