Share Transfer

Ø Share Transfer

To effect the share transfer, the following steps must be followed:

1.     Obtain share transfer deed in the prescribed format.

2.     Execute the share transfer deed duly signed by the Transferor and Transferee.

3.     Stamp the share transfer deed as per the Indian Stamp Act and Stamp Duty Notification in...

4. Have a witness sign the share...

The ownership of a private limited company is determined by the shareholding of the Company. To induct new investors or transfer ownership of the Company, the share of the private limited company would have to be transferred. In this article, we look at how to transfer shares of a private limited company.

 Restrictions on right of the shareholders to transfer shares are usually in two forms:

  • Rights of pre-emption: If a shareholder wishes to sell some or all of his shares, such shares must first be offered to other existing members of the private limited company at a price determined by the Directors or the Auditor of the Company. The value of the shares can be determined based on the formula / method prescribed in the Articles of Association. In no existing shareholder is interested, and then shares of the Company can be freely transferred to an outsider.
  •  Powers of Directors to refuse: The Director may have the powers to refuse registration of transfer of shares under certain circumstances – prescribed in the Articles of Association.

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