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PaieOverview of Share Transfer in PVT LTD company
Share transfer in a Private Limited Company involves the process of transferring ownership of company shares from one shareholder to another. This can occur between existing shareholders or to a new investor. The process requires compliance with the company’s Articles of Association (AOA) and the provisions of the Companies Act, 2013
Who is applicable for Share Transfer in PVT LTD company
Existing Shareholders who wish to transfer their shares to another partyProspective Shareholders looking to acquire shares in a Private Limited Company
Private Limited Companies that need to formalize the transfer of shares
Benefits of Share Transfer in PVT LTD company
1. Business Continuity
Facilitates smooth ownership transitions within the company
2. Capital Flexibility
Allows shareholders to liquidate or reallocate their shares, which may assist in business expansion or restructuring
3. Maintaining Control
Ensures that transfers of shares comply with the company’s Articles of Association and are approved by other shareholders
Documents Required for Share Transfer in PVT LTD company
- Share transfer deed (in the prescribed format)
- Board resolution approving the transfer (if applicable)
- Share certificate(s) of the transferor
- Proof of identity and address of both the transferor and transferee
- Copy of the company’s Articles of Association
- Stamp duty payment on the share transfer deed (as per state regulations)
Step-by-Step Process for Share Transfer in PVT LTD company
1. Check the AOA
Ensure the company’s Articles of Association allow the share transfer and that any restrictions or approval requirements are followed
2. Draft Share Transfer Deed
Prepare the share transfer deed with the relevant details, including share transfer price, names, and addresses of the transferor and transferee
3. Obtain Board Approval (if required)
Hold a board meeting to approve the transfer of shares and pass the necessary resolution
4. Stamp Duty
Pay the required stamp duty on the share transfer deed as per state laws
5. Execute Transfer
The transferor and transferee must sign the share transfer deed
5. Update Share Register
Record the details of the share transfer in the company’s register of shareholders
5. Issue New Share Certificates
The company must issue new share certificates in the name of the transferee
5. File with the ROC (if necessary)
Form SH-4, the instrument of transfer of securities, must be filed with the Registrar of Companies (ROC) within 60 days from the date of its execution. This is a mandatory requirement for companies to formally register the transfer of shares or securities.
Frequently Asked Questions
What are the restrictions on share transfers in a Private Limited Company?
Can a shareholder transfer shares to a non-shareholder?
How long does the share transfer process take?
Is stamp duty required for share transfer?
What happens if the share transfer is not registered in the companies books?
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