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What is share transfer?
The transfer of shares is a voluntary act by the holder of shares. It refers to an intentional transfer of title of the shares from the transferor (one who transfers) to the transferee (one who receives). During share transfer the rights and duties (as represented in a share of the company) are transferred from the shareholder who wishes not be a member of the company anymore to a person who wishes to be a member of the company. The following individuals are involved in the Share transfer :
  • Subscribers to the memorandum
  • In the case of a deceased person, the legal representative
  • Transferor
  • Transferee
  • Company (Whether listed or unlisted)
Documents required
The process for the transfer of shares shall be possible only if all required documents are furnished in a timely manner along with the supporting documents. The following documents will be required to initiate the process of transfer of shares:-

Copy of the transferor’s original share certificate

Authenticated copy of PAN card of the transferor(s) (i.e. sellers) and
transferee(s) (i.e. buyers)

A duly filled and signed Form SH-4.

The procedure of Share Transfer in Private Limited Company
To initiate the share transfer procedure, the following steps must be followed :
  • Step 1: The Articles of Association of the Private Limited Company must be reviewed and restrictions, if any must be addressed to.
  • Step 2: Shareholder must give notice in writing to the Director of the Company about his intention to transfer share of the company.
  • Step 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. (The Company Directors or the Company Auditor usually decides this price.)
  • Step 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.
  • Step 5: Filling and signing of the Share Transfer Deed in Form SH-4.
  • Step 6: The transfer certificate shall be stamped in accordance with the Indian Stamp Act and the Stamp Duty Notification in force in the state in question. For every 100 rupees of share value or part thereof, the official share transfer rate is 25 paisa. Check that the stamp affixed on the transfer deed is cancelled at the time of or before the signing of the transfer deed.
  • Step 7: The signatures of the transferor and the transferor of a share transfer deed must be witnessed by a person who shall mention his name, address and signature on the same.
  • Step 8: Attach the share certificate or allocation letter with the share transfer deed and deliver the same to the company. Within sixty (60) days from the date of execution the share transfer deed must be deposited to the Company by or on behalf of the transferor and by or on behalf of the transferee.
  • Step 9: The Board of Directors of the company must review the documents and if approved by passing a resolution, register such transfer and issue new share certificate in the name of the transferee.
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FAQ
What is Share Transfer?
A share transfer is the process of transferring existing shares from one person to another.
Who are involved in the Transfer of shares ?
The following persons are involved in the transfer of shares: Subscribers to the memorandum In the case of a deceased person, the legal representative Transferor Transferee Company
What consequences are faced by the company which is in default ?
Ans : A company in default shall pay a penalty of minimum Rs.25,000 and maximum Rs.5,00,000 .
How do I request a name change on my stock/bond certificate?

Any Shareholder who is desirous of changing his/her name in the stock/bond certificate shall make an application to the Company along with the following documents

Request letter mentioning the reason of the name change
Affidavit
Attested copy of the document where the name is already changed or Gazette Notification
Self-attested copy of the PAN card duly notarized
Self-attested copy of the address proof duly notarized.

How can I apply for a physical share transfer?
Physical share transfer shall take place only when the shares are not in the dematerialized form.
How can I file a claim for a lost share certificate or a duplicate certificate?

You must send a request letter signed by the holder, a self-attested FIR copy from the police station, ID proof, address proof, indemnity, and affidavit on a separate Rs 100 non-judicial stamp paper as per the proforma. The process takes 30-45 working days to finish.