Basic Procedure for Transfer of Share in a
Private Company |
- Transferor
should give a notice in writing for his intention to transfer his share to
the company.
- The
company, in turn, should notify other members as regards the availability
of shares and the price at which such shares would be available to them.
- Such
price is generally determined by the directors or the auditors of the
company.
- The
company should also intimate to the members, the time limit within which
they should communicate their option to purchase shares on transfer.
- If none
of the members comes forward to purchase shares then the shares can be
transferred to an outsider and the company will have no option, other than
to accept the transfer.
- Get the
Share transfer deed in form SH-4 duly executed both by
the transferor and the transferee.
- The
transfer deed should bear stamps according to the Indian Stamp Act and
Stamp Duty Notification in force in the State concerned. The present rate of transfer of shares is 25 Paise for every one hundred rupees of the value of shares or part thereof. Do not forget to cancel the stamps affixed at the time or before the signing of the transfer deed.
- The
signatures of the transferor and the transferee in the share transfer deed
must be witnessed by a person giving his signature, name, and address.
- Attach
the relevant share certificate or allotment letter with the share transfer
deed and deliver the same to the company. The share transfer deed should
be deposited with the company within sixty (60) days from the date of such
execution by or on behalf of the transferor and by or on behalf of the
transferee.
- After
receipt of the share transfer deed, the board shall consider the same. If the documentation for transfer of share is in order, board shall register the transfer by passing a resolution.
Consequences
Where any default is made in complying with
the provisions related to transfer of shares, the company shall be punishable
with a fine which shall not be less than Rs. 25,000/- but which may extend to Rs.
5,00,000/- and every officer of the company who is in default shall be
punishable with a fine which shall not be less than Rs. 10,000/- but which may
extend to Rs. 1,00,000/-.