Procedure for Transfer of shares
Free transferability of shares is an important requirement for the form of business of the Company, subject to certain limitations on the part of private companies. New Statute, dealt with significantly.
The constitutional provisions relating to the transfer of share one can refer to the following sources:
-Chapter 56 of the Business Act , 2013
-Regulation 11 of the Companies (Share Capital & Duties) Regulations 2014
-Provisions provided in the Model Articles of Association set out in Table 'F' of Schedule-I
Generally, the Private Company shall be guided by the Article of Association. Pursuant to Section 2(68) of the Companies Act, the 2013 Private Company limits the transfer of shares and forbids the invitation to the public to subscribe to any securities of the Company.
IMPORTANTE:
-Transfer in violation of Article Invalid: Share transfer in violation of Article shall be void.
-Transfer without consideration Invalid: Share transfer without consideration is void.
-Family transfer: transfer of shares on the basis of a family agreement without complying with the provisions of Section 108 is legal.
PROCEDURE FOR SHARES Move BY PRIVATE LIMITED COMPANY:
A. INTIMACTION:
The transferor should give a written notice of his intention to transfer his share to the company.
B. THE Business DUTY:
-The corporation, in turn, should advise other representatives of the availability of shares and of the price at which that share will be available to them.
-This price is usually calculated by the directors or auditors of the company on the basis of the book value of the stock.
-The organisation should also notify the members of the time period during which they should communicate their option to buy shares on transition.
-If none of the members submits to buy shares, the shares will be transferred to an outsider and the company may have no choice but to approve the transfer.
C. EXECUTION FORM: Get the Share transfer document in form SH-4 duly executed by both the transferor and the transferee. SH-4 is expected to be
-Duely stamped
-Dated to date
-Specifying the gender, the name, the address and the occupation, if any, of the transferee and the transferor.
-Folio No. of the Transferor and the Transferee.
-Distinctive No, Certificate The number of shares exchanged.
-Share Shift.
-Nominal value of the shares, taken into account.
-Implemented by or on behalf of the transferor and the transferee and
Time duration for the deposit of the transfer instrument with the company
-An instrument for the transfer of shares, i.e. Form 4 shall be delivered to the company within sixty ( 60 ) days from the date of its execution by or on behalf of the transferor and by or on behalf of the transferee.
-If the instrument of transfer has been lost or the instrument of transfer has not been delivered within the specified time , the company may register the transfer on such terms as may be deemed acceptable by the Board of Directors.
Value of the share transfer stamps to be affixed to the transfer document:
The stamp duty for the transfer of shares shall be 25 paisa for each Rs. 100 or part of the value of the shares as stated in Notification No. SO 130(E) of 28-01-2004 released by the Ministry of Finance, Department of Revenue, New Delhi.
D. SHARE CERTIFICATE AND ALLOTMENT LETTER:
Share certificate must be lodged with the company or, if there is no such share certificate, the letter of assignment must be lodged with the company along with the transfer instrument.
E. BOARD RESOLUTION: Once the company receives the share transfer deed along with the necessary documents, the company will review the deed and the documents and then pass the resolution for approval of the same at the board of directors of the company. After passing the decision of the Board, enter the name of the transferee in the register of the member as the beneficial owner of the shares. If the transfer paperwork is in order, the Board shall register the transfer by passing a resolution.
F. Delegation of Power: the authority to pass shares may be assigned to a director and may be considered to be a "one-man committee." The Board may impose restrictions on the powers of the Board, e.g. allowing up to 1,000 shares to be transferred to the specified amount. Transfers can also be authorised by the Board or committee by circular resolution.
Pursuant to the Listing Agreement: Powers of transfer should be transferred to an office or committee or registrar and share the transfer agent who should take part in the work at least once a fortnight.
G. ISSUE OF SHARE CERTIFICATE OF TRANSFER: The Corporation will issue a share certificate for the benefit of the transferee within one month of the approval of the Board of Directors. {56(4)(c))}. The company would endorse the name of the transferee to the Share Certificates.
NOTE: Note:
-The articles of a private corporation shall limit the right to transfer the shares of the company.
-Don't forget to cancel the stamps affixed at the time or before signing the transfer document.
-The signatures of the transferor and the transferee in the share transfer act must be observed by the individual giving his signature, name and address.
-Share transfer can not be denied if minor details are not included in the share transfer form. Minor error in the share transfer form should be ignored.
GIFT OF SHARE:
-The gift of shares does not become void in the event of non-compliance with the formalities prescribed by the Companies Act , 2013.
TAMP OF 'ROC' ON SHARE TRANSFER FORM:
-Practice of stamp dating by ROC was implemented in order to put an end to the problems caused by the empty transfer of documents.
-The Companies Act , 2013 does not contain any provisions relating to the dating of the share transfer form. There is also no clause in the Rules of Procedure.
-Possibly, the explanation is that after the widespread use of Demat shares on the stock exchange, the provision has lost its usefulness.
TRANSFER OF SHARES OF AFTER EXPIRY OF 60 Days:
If the transfer instrument is not delivered within the specified time ( 60 Days),
-Transfer Deed in Physical Form: the transfer of shares should be 'duly stamped' if the transfer of shares is in physical form.
-Transfer in Demat form: transfer in Demat form, stamp duty is not necessary.
-Value of the stamp duty: the stamp duty payable is Rs. 25 paisa per Rs. 100/-Value. (Not on the basis of Shares' Face Value).
-The adhesive stamp:
Stamp duty is payable by adhesive Stamps. The adhesive stamp should include the words "Share Transfer." Thus, ordinary stamps which are available in post offices etc. are not permitted for share transfer.
-Value to be indicated in the transfer form for the purpose of the stamp duty:
It was held that the value must be specified on the transfer form for the purpose of the stamp duty. If the stamp duty is not payable by the transferee. The transfer deed is valid even if the value is not stated in the transfer deed.
-Stamps may be affixed to a separate document and added to the transfer:
If there is insufficient room on the share transfer type, stamps can be affixed to the separate sheet of paper, accordingly cancelled and attached to the transfer document with cross reference. That is appropriate.
-No stamp tax payable to pass to nationalised banks:
A nationalised bank is not allowed to pay a stamp duty on the value of the shares at the time of sale.
Stamp cancellation:
-Adhesive stamps should be cancelled by drawing lines across or in some other way, so that they can not be used again. The value of the stamp, however, should be clear.
-If the share transfer deed bears stamps but does not cancel, the transfer can not be registered on the basis of such transfer deed.
-The cancellation of the Stamp by Corporation is illegal.
-If, by mistake, a corporation transfers shares even if the instrument has not been properly stamped, it can not ask for the correction of the members.
TRANSFER PROCEDURE OF Partially PAID UP SHARES:
-Power of the Board: the Board can refuse to register the transfer if
(a) the transfer of partially paying shares to an individual whom they do not approve of;
(b) any transfer of shares to which the company has a relation
-Corporate duty: if part-paid shares are received for transfer: the company shall give notice to the transferee in form SH-5 and, if any, give 2 (two) weeks notice of objection. Notice is not needed if the part-paid shares are lodged by the transferee.
-NOC from the transferee: as provided for in Rule 11(3), where NOC is not obtained from the transferee, the transfer can not be registered. But the section does not state that if the transferee fails to respond within 2 weeks, he can be considered to have no objection. "Thus, in my opinion, there is no need for a constructive letter of objection from him"
-The responsibility for payment of the balance shall lie with the transferee.
Often IMPORTANT POINTS:
-The transferor shall be considered to be the holder of the share until the name of the transferee has been registered in the registry of the transferee in respect of such shares.
Free transferability of shares is an important requirement for the form of business of the Company, subject to certain limitations on the part of private companies. New Statute, dealt with significantly.
The constitutional provisions relating to the transfer of share one can refer to the following sources:
-Chapter 56 of the Business Act , 2013
-Regulation 11 of the Companies (Share Capital & Duties) Regulations 2014
-Provisions provided in the Model Articles of Association set out in Table 'F' of Schedule-I
Generally, the Private Company shall be guided by the Article of Association. Pursuant to Section 2(68) of the Companies Act, the 2013 Private Company limits the transfer of shares and forbids the invitation to the public to subscribe to any securities of the Company.
IMPORTANTE:
-Transfer in violation of Article Invalid: Share transfer in violation of Article shall be void.
-Transfer without consideration Invalid: Share transfer without consideration is void.
-Family transfer: transfer of shares on the basis of a family agreement without complying with the provisions of Section 108 is legal.
PROCEDURE FOR SHARES Move BY PRIVATE LIMITED COMPANY:
A. INTIMACTION:
The transferor should give a written notice of his intention to transfer his share to the company.
B. THE Business DUTY:
-The corporation, in turn, should advise other representatives of the availability of shares and of the price at which that share will be available to them.
-This price is usually calculated by the directors or auditors of the company on the basis of the book value of the stock.
-The organisation should also notify the members of the time period during which they should communicate their option to buy shares on transition.
-If none of the members submits to buy shares, the shares will be transferred to an outsider and the company may have no choice but to approve the transfer.
C. EXECUTION FORM: Get the Share transfer document in form SH-4 duly executed by both the transferor and the transferee. SH-4 is expected to be
-Duely stamped
-Dated to date
-Specifying the gender, the name, the address and the occupation, if any, of the transferee and the transferor.
-Folio No. of the Transferor and the Transferee.
-Distinctive No, Certificate The number of shares exchanged.
-Share Shift.
-Nominal value of the shares, taken into account.
-Implemented by or on behalf of the transferor and the transferee and
Time duration for the deposit of the transfer instrument with the company
-An instrument for the transfer of shares, i.e. Form 4 shall be delivered to the company within sixty ( 60 ) days from the date of its execution by or on behalf of the transferor and by or on behalf of the transferee.
-If the instrument of transfer has been lost or the instrument of transfer has not been delivered within the specified time , the company may register the transfer on such terms as may be deemed acceptable by the Board of Directors.
Value of the share transfer stamps to be affixed to the transfer document:
The stamp duty for the transfer of shares shall be 25 paisa for each Rs. 100 or part of the value of the shares as stated in Notification No. SO 130(E) of 28-01-2004 released by the Ministry of Finance, Department of Revenue, New Delhi.
D. SHARE CERTIFICATE AND ALLOTMENT LETTER:
Share certificate must be lodged with the company or, if there is no such share certificate, the letter of assignment must be lodged with the company along with the transfer instrument.
E. BOARD RESOLUTION: Once the company receives the share transfer deed along with the necessary documents, the company will review the deed and the documents and then pass the resolution for approval of the same at the board of directors of the company. After passing the decision of the Board, enter the name of the transferee in the register of the member as the beneficial owner of the shares. If the transfer paperwork is in order, the Board shall register the transfer by passing a resolution.
F. Delegation of Power: the authority to pass shares may be assigned to a director and may be considered to be a "one-man committee." The Board may impose restrictions on the powers of the Board, e.g. allowing up to 1,000 shares to be transferred to the specified amount. Transfers can also be authorised by the Board or committee by circular resolution.
Pursuant to the Listing Agreement: Powers of transfer should be transferred to an office or committee or registrar and share the transfer agent who should take part in the work at least once a fortnight.
G. ISSUE OF SHARE CERTIFICATE OF TRANSFER: The Corporation will issue a share certificate for the benefit of the transferee within one month of the approval of the Board of Directors. {56(4)(c))}. The company would endorse the name of the transferee to the Share Certificates.
NOTE: Note:
-The articles of a private corporation shall limit the right to transfer the shares of the company.
-Don't forget to cancel the stamps affixed at the time or before signing the transfer document.
-The signatures of the transferor and the transferee in the share transfer act must be observed by the individual giving his signature, name and address.
-Share transfer can not be denied if minor details are not included in the share transfer form. Minor error in the share transfer form should be ignored.
GIFT OF SHARE:
-The gift of shares does not become void in the event of non-compliance with the formalities prescribed by the Companies Act , 2013.
TAMP OF 'ROC' ON SHARE TRANSFER FORM:
-Practice of stamp dating by ROC was implemented in order to put an end to the problems caused by the empty transfer of documents.
-The Companies Act , 2013 does not contain any provisions relating to the dating of the share transfer form. There is also no clause in the Rules of Procedure.
-Possibly, the explanation is that after the widespread use of Demat shares on the stock exchange, the provision has lost its usefulness.
TRANSFER OF SHARES OF AFTER EXPIRY OF 60 Days:
If the transfer instrument is not delivered within the specified time ( 60 Days),
-Transfer Deed in Physical Form: the transfer of shares should be 'duly stamped' if the transfer of shares is in physical form.
-Transfer in Demat form: transfer in Demat form, stamp duty is not necessary.
-Value of the stamp duty: the stamp duty payable is Rs. 25 paisa per Rs. 100/-Value. (Not on the basis of Shares' Face Value).
-The adhesive stamp:
Stamp duty is payable by adhesive Stamps. The adhesive stamp should include the words "Share Transfer." Thus, ordinary stamps which are available in post offices etc. are not permitted for share transfer.
-Value to be indicated in the transfer form for the purpose of the stamp duty:
It was held that the value must be specified on the transfer form for the purpose of the stamp duty. If the stamp duty is not payable by the transferee. The transfer deed is valid even if the value is not stated in the transfer deed.
-Stamps may be affixed to a separate document and added to the transfer:
If there is insufficient room on the share transfer type, stamps can be affixed to the separate sheet of paper, accordingly cancelled and attached to the transfer document with cross reference. That is appropriate.
-No stamp tax payable to pass to nationalised banks:
A nationalised bank is not allowed to pay a stamp duty on the value of the shares at the time of sale.
Stamp cancellation:
-Adhesive stamps should be cancelled by drawing lines across or in some other way, so that they can not be used again. The value of the stamp, however, should be clear.
-If the share transfer deed bears stamps but does not cancel, the transfer can not be registered on the basis of such transfer deed.
-The cancellation of the Stamp by Corporation is illegal.
-If, by mistake, a corporation transfers shares even if the instrument has not been properly stamped, it can not ask for the correction of the members.
TRANSFER PROCEDURE OF Partially PAID UP SHARES:
-Power of the Board: the Board can refuse to register the transfer if
(a) the transfer of partially paying shares to an individual whom they do not approve of;
(b) any transfer of shares to which the company has a relation
-Corporate duty: if part-paid shares are received for transfer: the company shall give notice to the transferee in form SH-5 and, if any, give 2 (two) weeks notice of objection. Notice is not needed if the part-paid shares are lodged by the transferee.
-NOC from the transferee: as provided for in Rule 11(3), where NOC is not obtained from the transferee, the transfer can not be registered. But the section does not state that if the transferee fails to respond within 2 weeks, he can be considered to have no objection. "Thus, in my opinion, there is no need for a constructive letter of objection from him"
-The responsibility for payment of the balance shall lie with the transferee.
Often IMPORTANT POINTS:
-The transferor shall be considered to be the holder of the share until the name of the transferee has been registered in the registry of the transferee in respect of such shares.
