A share transfer is the voluntary transfer of ownership rights in a company’s share capital from one person (the transferor) to another (the transferee). Under Indian corporate law, shares are recognised as movable property and may be transferred subject to statutory provisions and the company’s constitutional documents.
Share transfers in India are primarily derived from:
Each transaction must comply with both statutory law and the company’s Articles of Association to be legally effective.
The transferor and transferee execute the prescribed Form SH-4, duly stamped per the Indian Stamp Act as enforced by the relevant state.
The executed instrument must reach the company within 60 days of execution, with the original share certificate or letter of allotment.
The Board examines the documentation and passes a resolution approving registration, subject to statutory and constitutional requirements.
Private companies often impose pre-emptive rights, right of first refusal or approval conditions, which must be met before registration.
Payment of appropriate stamp duty is mandatory to render the transfer instrument legally enforceable.
Review of the AOA and shareholder agreements; evaluation of transfer restrictions, pricing mechanisms and approval requirements; pre-initiation compliance advisory.
Drafting and vetting the Share Transfer Deed (Form SH-4), verifying execution by both parties, coordinating stamp duty, and assembling supporting documents.
Preparing the board meeting notice and agenda, facilitating the board resolution approving the transfer, and updating statutory registers.
Entry in the Register of Members, cancellation of old certificates and issuance of new ones, and updating statutory records.
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Other services that often go hand in hand with share transfer.