Share Transfer Process

Transfer Of Shares Held In Physical Form

Applicable Act:

• The Indian Stamp Act, 1899
• Companies Act, 2013

Parties Involved:

• Transferor
• Transferee
• Board of Directors
• Member of the company

Documents involved

• SH-4
• Share Certificate or letter of allotment
• Board Resolution
• Article of Association

Type -1

Transferor intimate Company for his intention to transfer shares

Steps:

1. Transferor give notice in writing to company about his intention to transfer his Shares.
2. Company will intimate to all members of the company about the available shares and their price.
3. Price of share is determined by Board of directors and auditor of the company.
4. The last date to purchase the shares and the price at which the share are available will be disclosed to the members.
5. The member who agrees to obtain such shares informs the Company.
6. Board Meeting will be held and Transfer of instrument -SH-4 will be executed.
7. Board resolution will be passed for transferring such shares.
8. It should be noted that SH-4 is duly stamped, dated, and signed by both transferor and transferee.
9. New share Certificates or Register of members and Register of Share Transfer need to be updated accordingly.

Type -2

Transferor approach to the Company along with Proper Instrument of transfer of securities (Form No. SH.4 )

Steps:

1. Proper Instrument of transfer of securities- Form No. SH.4, shall be delivered to the company within 60 days from the date of execution of such instrument.
2. Form SH-4 must be stamped, dated and signed by the transferor and transferee and witness.
3. Form SH-4 must be delivered to the company along with the relevant Share Certificate or letter of allotment of securities
4. *Letter Of Allotment Of Securities -The allotment letter refers to a letter that notifies the applicant that the company has allotted a certain number of shares to him. It is presented as a temporary certificate of share ownership on receipt of share payment.
5. Board meeting will be held and Board resolution will be passed for entering such transfer.
6. Effective entry will be made at relevant Share certificates.
7. Register of Share Transfer and Register of members needs to be updated accordingly.

In Case shares are Partly paid-up:

A company shall not register a transfer of partly paid shares, unless the company has given a notice in Form No. SH.5 to the transferee and the transferee has given no objection to the transfer within two weeks from the date of receipt of notice.

Stamp duty calculation in case of gift of shares

In the Case of Gifting of Shares, the Consideration value is nill. But Stamp duty is mandatorily required to pay. So market value on the date of transfer needs to be considered for paying stamp duty.

RATE OF STAMP DUTY

.015% effective from 1^st July 2020.

Stamp Duty in case of Gifting of shares:

The stamp duty is calculated on the market value on the date of transfer in case of transfer of shares by way of gift.