Transfer and Transmission of Securities Under Companies Act,2013

Meaning:-

• Transfer of Shares

Transfer of shares is a transaction resulting in a change of share ownership. Transfer of shares refers to the intentional transfer of title (rights as well as duties) to shares by one person to another.  It is a voluntary act of a member that is accompanied according to the articles mentioned in the AOA of the company.

• Transmission of Shares:-

Transmission of shares means the transfer of title to shares operation of law; when a shareholder dies, his shares immediately pass to the personal representatives or, if a member is declared bankrupt, their shares will vest in the trustee in bankruptcy.

Parties To The Transfer and Transmission Of Shares:-

• Subscribers to the memorandum.
• Legal Representative, in case of a deceased.
• Transferor.
• Transferee.
• Company (whether listed/ unlisted).

Procedure For Transfer of Shares:-

1. At first, the deeds which are transferred need to be obtained in the prescribed form i.e., SH-4.
2. It must be duly dated, stamped and signed by the concerned parties. (Stamp duty on Transfer of security on delivery and non delivery basis: 0.015% and 0.003%).
3. It must specify the name, address, number of shares to be transferred and occupation, if any, of the transferee.
4. The form SH-4 must be delivered to the company by the transferor or the transferee within a period of 60 days from the date of execution, along with the certificate relating to the securities, or if no such certificate is in existence, along with the letter of allotment of securities.

Note:- Where the instrument of transfer has been lost or the instrument of transfer has not been delivered within the prescribed period, the company may register the transfer on such terms as to indemnity as the Board may think fit.

Procedure for Transmission of Securities:-

 Intimation/application of Transmission accompanied with followings relevant documents (as require) would be enough for valid transmission request. Execution of transfer deed not required in case of transmission of shares.

Relevant Documents Required For Transmission of Securities:-

1. Certified copy of Death certificate
2. Self attested copy of PAN card
3. Succession certificate or Probate of will or Will or Letter of administration or Court decree
4.  Specimen signature of the successor.

Transfer In Case of Partly Paid Up Shares:-

When the transfer of is of shares which are partly paid-up shares, 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.

Some Important Time Limits:-

Penalty:-

For Company:- Twenty-five thousand rupees but which may extend to five lakh rupees.

For every officer of the company:- Ten thousand rupees but which may extend to one lakh rupees.