Transfer and Transmission of of shares/Securities
Transfer of shares means transferring the ownership and
title in the shares/securities of a company by a registered shareholder to
another shareholder or any other person for a consideration or without
consideration i.e. may be by way of gift.
Provision governing the transfer of shares
Section 56 of the companies Act 2013 and Sub - rule (1) of
rule 11 of the Companies (Share Capital and Debentures) Rules 2014
The procedure for transfer of shares
The transfer of shares/securities must be entered in a
proper instrument form i.e. Form SH-4 (Share Transfer Deed). The share transfer
form must state the complete details of the shares/securities such as type of
security, Face Value, number of shares, Respective Distinct Numbers of the
shares, consideration, folio of transferor and transferee, names & address
of transferor and transferee and amount of stamp duty.
The share transfer Form is to be dated and signed by both
the transferor and transferee along with witness
The Share Transfer form (Form SH-4) is to be duly stamped
@0.015% of Consideration. In case the transfer is by way of Gift no stamp duty
is to be paid because the consideration will not exist. However, a Gift deed is
to be executed and annexed to the share transfer Form SH-4.
The Share transfer form duly filled, duly stamped &
executed and signed form is to be submitted to the respective company within 60
days of execution of Share Transfer form for approval of the Board.
The Annexures to the Share transfer form are
- Share Certificate issued by the Company in the name of transferor or Letter of allotment of shares issued by the company.
- Gift Deed, in case the transfer is by way of Gift.
In case of deceased person if his legal representative
applies for transfer in his name, it shall be valid if the legal representative
submits death certificate along with his application.
Transmission in case of nomination shall be made in the name
of nominee only. In case of dispute the decision of the court shall be final
& binding.
In case of partly paid up shares
1. Notice to the transferee by company.
2. Transferee to reply (OR) give NOC within 2 weeks from
receipt of notice.
Section 57 - Punishment for personation of shareholders
If any person deceitfully with an intention to defraud the
company personates himself as an owner of any security and obtains or attempts
to obtain any benefit of shares/securities.
He shall be punishable with Imprisonment of Minimum 1 Year and
Maximum of 3 Years and Fine of Minimum Rs.1 Lakh and Maximum or Rs. 5 Lakhs.
Section 58 - Refusal of registration & appeal against refusal
On receiving the share transfer form (SH-4) by the
shareholder the company must transfer the shares within 30 days from the date
of application for Transfer/Transmission.
In case of Private Company, if Company Refuses to Transfer, and
the reasons for refusal are being communicated to the shareholder. The Transferee
may appeal to the tribunal Within 30 days from the Receipt of notice of refusal.
If the company fails to transfer within 30 Days the reasons
for refusal are not being communicated to the shareholder Transferee may appeal
to the tribunal Within 60 days from the date of an application for transfer /
transmission.
If the aggrieved party give the sufficient cause, the
tribunal may accept the application even after 60/90 Days.
In case of public company the time limit for appeal shall be
60 days & 90 days Mutatis Mutandis.
On receiving application tribunal shall give opportunity of
being heard to both the parties the tribunal may
- Order the company to register the transfer within 10 days (or)
- Dismiss the order (or)
- Order the company to rectify the register & pay of receipt of the order damages to aggrieved party
If the tribunal gives the order to the company to register the
transfer within 10 days or Order the company to rectify the register & pay of
receipt of the order damages to aggrieved party. It is to be complied by the
company as per tribunals Order.
Non-compliance of the tribunal order may leads to Fine of Minimum
Rs. 1 Lakh up to Maximum of Rs.5 Lakhs and Imprisonment of Minimum 1 Year up to
Maximum of 5 Years