Meaning of Share Transfer, Time Limit and Process for share Transfer

Introduction

The transferability of a company’s shares is a crucial feature. Moveable property includes shares and debentures. They can be transferred in the ways specified by the company’s AOA. This article will give you useful insights on the Meaning of Share Transfer, the process for share transfer, and the time limits for Share Transfers.

Meaning of Share Transfer

Transfer of shares refers to the voluntary transfer of a business member’s rights and possibly their duties (as represented in a share of the company). The rights and obligations of the transfer of shares take place from a shareholder who chooses to no longer be a member of the firm to a person who seeks to join. In the absence of any specific restrictions under the company’s articles, shares in a company are therefore transferable like any other movable property.

Entities that are involved in the process for Share Transfer

• Legal Representator in the event of a death
• Subscribers to the memorandum
• Transferor
• Transferee
• Company

Documents required for Share Transfer

• Notice of Transfer by the Private Limited Company
• Offer letter from existing shareholders of the company
• Existing Shareholders’ Approval for the Transfer
• MOA and AOA of the Company
• Share Transfer Deed of the Company with Paid Stamp Duty and Additional Resolutions Relating to the Transfer of Shares
• Any other transfer related certificate (If needed)

Process for Share Transfer of a Private Limited Company 

• Obtain a share transfer deed.
• Execute the share transfer deed, which has been signed by both the Transferor and the Transferee.
• Stamp the share transfer deed in accordance with the Indian Stamp Act and the State Stamp Duty Notification.
• Sign the share transfer deed with a witness’ signature, name, and address.
• Deliver the transfer deed and the share certificate or allotment letter to the Company.
• The documents must be processed by the company, and if approved, a new share certificate in the name of the transferee must be issued.

Time limit for share transfer certificate registration

Company having Share Capital: The transfer of a company’s securities or a member’s interest in the organisation other than the beneficial owners must be registered by the company without an appropriate instrument of transfer within 60 days of the execution date.

Application made solely by the transferor: Until the company promptly notifies the transferor and transferee of the application and both parties provide a no-objection certificate within two weeks of receiving the notice, the transfer will not be registered.

The company must issue certificates for all securities issued, transferred, or transmitted under the specified conditions and within the specified time frame. Below is the table of the time frame for any share transfer certificate registration:

FAQs on Share Transfer of a company

1. What would be the simplest approach to think about a company’s share transfer?

A resolution pertaining to the same must be taken into consideration for the simplest way to transfer shares in a company.

2. What type of document is utilized for the transfer of shares?

The form SH-4 is the document or instrument used for share transfers.

3. What is the penalty amount for not complying with Company Share Transfer compliances?

• For companies – the minimum and maximum amounts are INR 25,000 and INR 5,00,000.
• A law enforcement officer –  The default amount is between INR 10,000 and INR 1,000,000.

Conclusion

Shares can be transferred when one person transfers ownership of them to another. It might be a current employee or someone from the outside. The Companies Act of 2013, Section 44 further states that shares are movable property that may be transferred subject to the AOA (Article of Association) of the company.