In the Private Limited Company the company capital is divided in to the number of shares and each share has a value. When any new investor come in the company and invest some amount than the existing shareholder transfer his share to new shareholder against his capital investment. The company article provides the way how to transfer the shareholding to new member of existing member.
Procedure For Transfer Of Shares in Private Limited Company
- Check whether the Articles of Association allows you for transfer of shares, if not then amend the articles by passing special resolution in extra-ordinary general meeting.
- The transferor shall give a notice in writing for his intention to transfer his shares to the company.
- The company will now inform the other members as regards the availability of shares and the price at which the shares would be available and will quote a time limit within which the members can purchase the shares. If within the time limit no member comes to purchase the shares then the shares will be offered to an outsider and if the outsider accepts the shares then the company will have to accept the transfer. The price of the shares is finalized by the directors or the auditors of the company.
- Obtain the Share transfer deed in form SH-4 duly executed by both the transferor and transferee. The transfer deed should bear stamps according to the Indian Stamp Act and Stamp Duty Notification. The present rate of transfer of shares is 25 Paise for every one hundred rupees of the value of shares or part. Cancel the stamps affixed at the time or before the signing of the transfer deed. The signatures of both the transferor and transferee must be witnessed by a person whose details like his signature, name, and address.
Share certificate or allotment letter needs to be attached to the share transfer deed and deliver it to the company. The share transfer deed needs to be deposited with the company within 60 days from the date of such execution by or on behalf of the transferor and by or on behalf of the transferee.
- If the documents are in order then the board shall register the transfer by passing a board resolution. If the board refuses to register the transfer of shares then a notice will be served to the transferee within 30 days of receipt of such share deed and an appeal can be done to the tribunal within 30 days from the date of notice served by the company.
It is to be noted that no such notice or intimation is given to ROC. The share transfer details will be given to ROC in the annual return of the company in e-form MGT-7.
- Share certificate
- SH-4 executed
- Stamping of transfer deed
- Board meeting notice
- Board minutes
- Board meeting attendance
Frequently asked questions
What is the share transfer?
Share transfer means one person transfer his/her share to another person.
Any approval required for share transfer?
No, there is no approval required from ROC to transfer the share capital.
Is it mandatory to execute share transfer deed?
Yes, for legally share transfer the deed should be executed between both person.
Stamping is required in share transfer deed?
Yes, stamping charge is 0.25% is paid through share transfer deed.
How share transfer is done?
The share transfer deed is prepare in SH-4 and send to the company for approval from board of directors.