Procedure for Transfer of Shares under Companies Act 2013

The Share Transfer Procedure of Public Company: 

Section 56 to 59 of the Companies Act, 2013(3) provides for the procedure of transfer of shares of a company. The basic transfer procedure of shares is as follows:

The board shall then register the transfer of shares if the documentation with regard to the transfer of shares is in order. The board shall register such transfer of shares only after passing a board resolution

1. One has to execute the share transfer deed in the share transfer Form SH 4 both by the transferor and transferee of the shares
2. To put stamps on the share transfer deed in accordance with the provisions of the Indian Stamp Act and one has to pay the stamp duty to the respective state
3. Along with the signatures of the transferor and the transferee, there must be signatures of two witnesses who will also affix their name, address, and signature on the deed
4. One needs to attach the share transfer certificate or the allotment letter of the shares to the deed and send the same to the company either by the transferor or the transferee of the shares
5. One needs to submit the share transfer deed to the company within 60 days from the date of execution of the deed by or on behalf of the transferor and transferee
6. Once the company receives it, the board of directors shall consider the same
7. The board shall then register the transfer of shares if the documentation with regard to the transfer of shares is in order. The board shall register such transfer of shares only after passing a board resolution

The Procedure for Transfer of Shares in a Private Limited Company

As told earlier, the articles of the company or their association govern the share transfer procedure in private limited company. These are the following steps for transfer of shares in a private company:

1. The transferor of the share should give notice in writing to the company about his/her intention to transfer the shares in a private limited company
2. Upon receiving the written notice from the transferor, the company will notify the members of the company about the availability of shares for purchase
3. Next in the procedure of transfer of shares in a private limited company, is that the company shall state the price of such shares along with the time limit in which the members should tell if they have an interest in buying the shares
4. If none of the members shows interest in the share transfer procedure for a private limited company, then the transferor can transfer the shares to an outsider, to which the company cannot object
5. When somebody shows interest in the process of transfer of shares in a private limited company, then one has to fill up the share transfer deed, or the share transfer form for a private company as per the share transfer Form SH 4
6. The next step in the procedure for transfer of shares of a private limited company is a relevant share certificate or the allotment letter
7. One should duly execute the form for transfer of shares in a private company by both the transferor and transferee. For execution, the deed should be duly stamped, adequately valued, dated and cancelled
8. In respect to the transfer of shares, you should attach it with the deed and send the same to the company within 60 days from the date of execution either by the transferor or the transferee of shares
9. Share transfer agreement and the executive shareholder agreement shall regulate the relationship between the shareholder