Procedure for Transfer of Shares in Private Limited Company

Procedure-Transfer-Shares-Private-Limited-Company

Procedure for Transfer of Shares in Private Limited Company

 
     1.  Generally, a Private Company is guided by its Article of Association. As per Section 2(68) of Companies Act, 2013 Private Company restricts the transfer of shares and prohibit invitation to public to subscribe to any securities of the Company.
     2.  Shareholder must give notice in writing to the Director of the Company about intention to transfer share of the company.
   3. Determine the price as per Articles of Association at which the shares of the Company will first be offered to present shareholders of the Company. (Usually this price is determined by the Directors of the Company or an Auditor of the Company.)
4.    The company must then give notice to the other shareholders about the availability of share, the last date to purchase the shares and the price at which the share are available.
5.   If any of the present shareholders come forward for the purchase of shares, such shares must be allotted to them. In case no present shareholder is interested or excess shares are available, the same can be transferred to the outsider.
6.   An instrument of transfer of shares i.e. Form SH.4 with the date of its execution specified thereon shall be delivered to the company within sixty (60) days from the date of such execution by or on behalf of the transferor and by or on behalf of the transferee.
7.     Where the instrument of transfer has been lost or the instrument of transfer has not been delivered within the prescribed period, the company may register the transfer on such terms as to indemnity as the Board may think fit.
8.    Stamp duty for transfer of shares is 25 paisa for every Rs. 100 or part thereof of the value of shares as per Notification No. SO 130(E), dated 28-01-2004 issued by the Ministry of Finance, Department of Revenue, New Delhi.
9.   Share certificate must be lodged with the company, or if no such share certificate exists then a letter of allotment must be lodged with the company along with the instrument of transfer.
10. Once the company will receive share transfer deed along with requisite documents then company will check the deed and documents then pass resolution for acceptance of same in the Board Meeting of the Company. After passing of Board resolution enter the name of transferee in the register of member as the beneficial owner of such shares. If the documentation for transfer of share is in order, board shall register the transfer by passing a resolution.
11. The Company will within one month of passing of Board Resolution will issue share certificate in the favour of transferee. {56(4)(c)}. Company will endorse the name of Transferee behind the Share Certificates.
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