{"id":13367,"date":"2020-09-26T17:57:33","date_gmt":"2020-09-26T12:27:33","guid":{"rendered":"https:\/\/swaritadvisors.com\/learning\/?p=13367"},"modified":"2020-11-25T14:53:28","modified_gmt":"2020-11-25T09:23:28","slug":"transfer-of-equity-shares","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/learning\/transfer-of-equity-shares\/","title":{"rendered":"Transfer of Equity Shares: Its Concept and Procedure"},"content":{"rendered":"\n<p class=\"has-drop-cap\">The term \u201cTransfer of Equity Shares\u201d denotes a procedure under which all the rights and duties of a shareholder or a member are voluntarily handed over back to the company. Further, this process is undertaken by the shareholder at the time when he\/she does not wish to continue his\/her shareholding.<\/p>\n\n\n\n<p>In this blog, we will discuss the concept of Transfer of Equity Shares, together with the difference between both.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3a8b316b95b\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3a8b316b95b\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/learning\/transfer-of-equity-shares\/#Concept_of_Transfer_of_Securities\" title=\"Concept of Transfer of Securities\">Concept of Transfer of Securities<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/learning\/transfer-of-equity-shares\/#Parties_Involved_in_the_Process_of_Transfer_of_Shares\" title=\"Parties Involved in the Process of Transfer of Shares\">Parties Involved in the Process of Transfer of Shares<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/learning\/transfer-of-equity-shares\/#Governing_Laws_for_Transfer_of_Equity_Shares\" title=\"Governing Laws for Transfer of Equity Shares\">Governing Laws for Transfer of Equity Shares<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/learning\/transfer-of-equity-shares\/#Key_Points_Regarding_the_Transfer_of_Shares\" title=\"Key Points Regarding the Transfer of Shares\">Key Points Regarding the Transfer of Shares<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/learning\/transfer-of-equity-shares\/#Transfer_in_Violation_of_AOA\" title=\"Transfer in Violation of AOA\">Transfer in Violation of AOA<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/learning\/transfer-of-equity-shares\/#Transfer_Without_Consideration\" title=\"Transfer Without Consideration\">Transfer Without Consideration<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/swaritadvisors.com\/learning\/transfer-of-equity-shares\/#Transfer_in_Family_Arrangement\" title=\"Transfer in Family Arrangement\">Transfer in Family Arrangement<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/swaritadvisors.com\/learning\/transfer-of-equity-shares\/#Documents_Required_for_Transfer_of_Equity_Shares\" title=\"Documents Required for Transfer of Equity Shares\">Documents Required for Transfer of Equity Shares<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/swaritadvisors.com\/learning\/transfer-of-equity-shares\/#Procedure_for_Transfer_of_Equity_Shares\" title=\"Procedure for Transfer of Equity Shares\">Procedure for Transfer of Equity Shares<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/swaritadvisors.com\/learning\/transfer-of-equity-shares\/#Intimation\" title=\"Intimation\">Intimation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/swaritadvisors.com\/learning\/transfer-of-equity-shares\/#Duty_of_the_Company\" title=\"Duty of the Company\">Duty of the Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/swaritadvisors.com\/learning\/transfer-of-equity-shares\/#Execution_Form\" title=\"Execution Form\">Execution Form<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/swaritadvisors.com\/learning\/transfer-of-equity-shares\/#Time_Period_for_the_Deposit_of_Instrument_for_Transfer_with_the_Company\" title=\"Time Period for the Deposit of Instrument for\nTransfer with the Company\">Time Period for the Deposit of Instrument for\nTransfer with the Company<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/swaritadvisors.com\/learning\/transfer-of-equity-shares\/#Stamp_Duty_for_the_Transfer_of_Equity_Shares\" title=\"Stamp Duty for\nthe Transfer of Equity Shares\">Stamp Duty for\nthe Transfer of Equity Shares<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/swaritadvisors.com\/learning\/transfer-of-equity-shares\/#Letter_of_Allotment_or_Share_Certificate\" title=\"Letter of Allotment or Share Certificate\">Letter of Allotment or Share Certificate<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/swaritadvisors.com\/learning\/transfer-of-equity-shares\/#Passing_of_Board_Resolution\" title=\"Passing of Board Resolution\">Passing of Board Resolution<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/swaritadvisors.com\/learning\/transfer-of-equity-shares\/#Delegation_of_Power\" title=\"Delegation of Power\">Delegation of Power<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/swaritadvisors.com\/learning\/transfer-of-equity-shares\/#Issue_of_Share_Transfer_Certificate\" title=\"Issue of Share Transfer Certificate\">Issue of Share Transfer Certificate<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/swaritadvisors.com\/learning\/transfer-of-equity-shares\/#Things_to_Remember_in_the_Transfer_of_Equity_Shares\" title=\"Things to Remember in the Transfer of Equity Shares\">Things to Remember in the Transfer of Equity Shares<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/swaritadvisors.com\/learning\/transfer-of-equity-shares\/#Penalty_for_Non-Compliance\" title=\"Penalty for Non-Compliance\">Penalty for Non-Compliance<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-21\" href=\"https:\/\/swaritadvisors.com\/learning\/transfer-of-equity-shares\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Concept_of_Transfer_of_Securities\"><\/span>Concept of Transfer of Securities<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The term \u201cTransfer of Securities\u201d denotes a process in which a shareholder or a member of a company voluntarily handover his\/her shares back to the company. In other words, a shareholder decides to terminate his\/her shareholding in a company.<\/p>\n\n\n\n<p>However, it shall be relevant to note that the Process of Transfer of Equity Shares is subject to the restrictions specified in the Articles of Association (AOA).<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Parties_Involved_in_the_Process_of_Transfer_of_Shares\"><\/span>Parties Involved in the Process of Transfer of Shares<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/09\/Parties-Involved-in-the-Process-of-Transfer-of-Shares.png\" alt=\"Parties Involved in the Process of Transfer of Shares\" class=\"wp-image-13372\" width=\"520\" height=\"325\" srcset=\"https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/09\/Parties-Involved-in-the-Process-of-Transfer-of-Shares.png 1000w, https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/09\/Parties-Involved-in-the-Process-of-Transfer-of-Shares-300x187.png 300w, https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/09\/Parties-Involved-in-the-Process-of-Transfer-of-Shares-768x478.png 768w\" sizes=\"(max-width: 520px) 100vw, 520px\" \/><\/figure><\/div>\n\n\n\n<p>The Parties involved in the process of Transfer of Shares\nare as follows:<\/p>\n\n\n\n<ol><li>Subscribers to the MOA (<strong><a href=\"https:\/\/swaritadvisors.com\/learning\/alteration-of-moa-guide-to-alter-memorandum-of-association\/\" class=\"text-primary\">Memorandum of Association<\/a><\/strong>);<\/li><li>Legal Representatives or LR of the deceased;<\/li><li>Transferee;<\/li><li>Transferor;<\/li><li>Company (Whether Listed\/Unlisted);<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Governing_Laws_for_Transfer_of_Equity_Shares\"><\/span>Governing Laws for Transfer of Equity Shares<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The Section 56 of the Companies Act 2013 acts as the Governing Laws for the Transfer of Shares. As per this section securities are movable property and are eligible to be transferred subject to the provisions of the Articles of Associations. Therefore, a shareholder has a right to freely transfer his\/ her shares to anyone. <\/p>\n\n\n\n<p>Further, Rule 11 of the Companies (Share Capital and Debentures) Rules 2020 and the provisions gave under Model AOA in Table F of Schedule I act as the governing laws as well.<\/p>\n\n\n\n<p>However, it shall be relevant to note that only the shareholders of a <a href=\"https:\/\/swaritadvisors.com\/public-limited-company-registration\" class=\"text-primary\"><strong>registered public limited company<\/strong><\/a> have the right to transfer their shares. That means the shareholders of a Private Limited Company do not have the right to transfer their shares.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Key_Points_Regarding_the_Transfer_of_Shares\"><\/span>Key Points Regarding the Transfer of Shares<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/09\/Key-Points-Regarding-the-Transfer-of-Shares-1.png\" alt=\"Key Points of Transfer of Shares\" class=\"wp-image-13386\" width=\"425\" height=\"380\" srcset=\"https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/09\/Key-Points-Regarding-the-Transfer-of-Shares-1.png 1000w, https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/09\/Key-Points-Regarding-the-Transfer-of-Shares-1-300x268.png 300w, https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/09\/Key-Points-Regarding-the-Transfer-of-Shares-1-768x687.png 768w\" sizes=\"(max-width: 425px) 100vw, 425px\" \/><\/figure><\/div>\n\n\n\n<p>The <strong><em>key points<\/em><\/strong> regarding the <strong><em>Transfer\nof Shares<\/em><\/strong> are as follows:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Transfer_in_Violation_of_AOA\"><\/span>Transfer in Violation of AOA<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Any share transferred in the violation of the Articles of Association (AOA) of the Company is void.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Transfer_Without_Consideration\"><\/span>Transfer Without Consideration<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Any share transferred without adequate or no considerations shall be considered as void.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Transfer_in_Family_Arrangement\"><\/span>Transfer in Family Arrangement<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>It shall be relevant to note that any transfer made as per the provision of section 108 of the Companies Act 2013 in the Family Arrangement is valid in the eyes of laws.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Documents_Required_for_Transfer_of_Equity_Shares\"><\/span>Documents Required for Transfer of Equity Shares<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/09\/Documents-Required-for-Transfer-of-Equity-Shares-1024x768.png\" alt=\"Documents Required for Transfer of Equity Shares\" class=\"wp-image-13370\" width=\"588\" height=\"441\" srcset=\"https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/09\/Documents-Required-for-Transfer-of-Equity-Shares-1024x768.png 1024w, https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/09\/Documents-Required-for-Transfer-of-Equity-Shares-300x225.png 300w, https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/09\/Documents-Required-for-Transfer-of-Equity-Shares-768x576.png 768w, https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/09\/Documents-Required-for-Transfer-of-Equity-Shares.png 1200w\" sizes=\"(max-width: 588px) 100vw, 588px\" \/><\/figure><\/div>\n\n\n\n<p>The <strong><em>documents required<\/em><\/strong> for <strong><em>Transfer\nof Equity Shares<\/em><\/strong> are as follows:<\/p>\n\n\n\n<ol><li>Notice sent by the Transferor to the Company;<\/li><li>Board Resolution (BR) passed for considering the Notice sent by the Transferor to Company;<\/li><li>Letter of Offer given by the Company to its Existing Shareholders;<\/li><li>Dissent Letter from the Existing Shareholder;<\/li><li>Share Transfer Deed in MCA Form SH 4 together with the Stamp Duty paid;<\/li><li>Share Certificates;<\/li><li>Board Resolution (BR) passed for registering Transfer of Shares;<\/li><\/ol>\n\n\n\n<p><b>Also, Read:<\/b> <mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/learning\/what-is-the-difference-between-takeover-and-merger\/\">What is the Difference between Takeover and Merger?<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Procedure_for_Transfer_of_Equity_Shares\"><\/span>Procedure for Transfer of Equity Shares<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/09\/Procedure-for-Transfer-of-Equity-Shares-1024x768.png\" alt=\"Procedure for Transfer of Equity Shares\" class=\"wp-image-13369\" width=\"589\" height=\"441\" srcset=\"https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/09\/Procedure-for-Transfer-of-Equity-Shares-1024x768.png 1024w, https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/09\/Procedure-for-Transfer-of-Equity-Shares-300x225.png 300w, https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/09\/Procedure-for-Transfer-of-Equity-Shares-768x576.png 768w, https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/09\/Procedure-for-Transfer-of-Equity-Shares.png 1200w\" sizes=\"(max-width: 589px) 100vw, 589px\" \/><\/figure><\/div>\n\n\n\n<p>The steps involved in the process of transfer of\nequity shares are as follows:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Intimation\"><\/span>Intimation<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The first and the foremost step in the process of\ntransfer of shares is that the transferor must give his\/ her intention of\ntransferring shares in writing to the company.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Duty_of_the_Company\"><\/span>Duty of the Company<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The <em><strong>duties of a company<\/strong><\/em> in the <strong><em>process of Transfer of Shares<\/em><\/strong> can be summarised as:<\/p>\n\n\n\n<ol><li>A company must\nnotify its member regarding the availability of shares and the price at which\nsuch shares will be offered to them.<\/li><li>The price of a\nshare is determined by the directors and auditor of the company on the basis of\nthe book value of shares.<\/li><li>The company must\ninform its member regarding the time limit within which they need to\ncommunicate their option to purchase their shares on transfer.<\/li><li>In case none of\nthe members chooses to purchase the shares, the same are then transferred to\nthe outsider, and it will become compulsory for the company to accept the\ntransfer.<\/li><\/ol>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Execution_Form\"><\/span>Execution Form<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Now, in the next step, the company needs to execute a Share Transfer Deed in form SH 4. Such execution will be done by both the Transferor and Transferee. <\/p>\n\n\n\n<p>Further, <strong><em>Form SH 4<\/em><\/strong> must include the following\nthings:<\/p>\n\n\n\n<ol><li>It should\nbe Duly Stamped;<\/li><li>Properly\nDated;<\/li><li>Must\nspecify the Name, Father Name, Address, and Occupation of both Transferor and\nTransferee;<\/li><li>Folio No\nof both Transferor and Transferee;<\/li><li>Distinctive\nNo.;<\/li><li>Certificate\nNo of the Shares Transferred;<\/li><li>No of\nShare Transferred;<\/li><li>Nominal\nValue of the Shares Transferred;<\/li><li>Consideration Received;<\/li><li>Must be executed by or on behalf of the transferee and\ntransferor;<\/li><\/ol>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Time_Period_for_the_Deposit_of_Instrument_for_Transfer_with_the_Company\"><\/span>Time Period for the Deposit of Instrument for\nTransfer with the Company<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<ol><li>The company needs to file the instrument for Transfer of Shares, i.e., <em><strong>Form SH 4 <\/strong><\/em>within <em><strong>60 day<\/strong>s<\/em> from the date of execution. Further, the form must have the date of execution.<\/li><li>If in case, the instrument for transfer has been lost or has not been delivered within the specified period, then the company may register such transfer on the terms of indemnity as the Board thinks fit.<\/li><\/ol>\n\n\n\n<h4 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Stamp_Duty_for_the_Transfer_of_Equity_Shares\"><\/span>Stamp Duty for\nthe Transfer of Equity Shares<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>The stamp duty for the Transfer of Equity Shares is 25 paisa for every Rs 100 or part thereof.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Letter_of_Allotment_or_Share_Certificate\"><\/span>Letter of Allotment or Share Certificate<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The transferor must file the Share Certificate with the company. If in case there is no share certificate, then the said transferor needs to file <em><strong>Letter of Allotment<\/strong><\/em> (LOA) with the company, together with the instrument of transfer.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Passing_of_Board_Resolution\"><\/span>Passing of Board Resolution<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>After receiving the share transfer\ndeed and the requisite documents, the company will then check the documents and\ndeed passed. After that, the company needs to hold a board meeting to pass a\nBoard Resolution for entering the name of the transferee in the \u201c<strong><em>Register\nof Members<\/em><\/strong>\u201d as the beneficial owner for such shares.<\/p>\n\n\n\n<p>Further, if the documents submitted\nare in order, the board shall approve the transfer by passing a board\nresolution. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Delegation_of_Power\"><\/span>Delegation of Power<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The Board of Directors (BOD) can delegate the power of transfer of share to one director, which will be called \u201c<strong><em>One Man Committee<\/em><\/strong>\u201d. <\/p>\n\n\n\n<p>Further, the board can place restrictions and limitations on the power of the committee as well. <em><strong>For example<\/strong><\/em>, allowing transfer up to a prescribed limit. <\/p>\n\n\n\n<p>Moreover, the Board of Directors or Committee can approve the transfer by \u201c<strong><em>Circular Resolution<\/em><\/strong>\u201d as well.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Issue_of_Share_Transfer_Certificate\"><\/span>Issue of Share Transfer Certificate<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>As per section 56 (4) (c) of the Companies Act 2013, the Company within a period of 1 month, starting from the date of passing of Board Resolution needs to issue a \u201cShare Transfer Certificate\u201d in favour of transferee. <\/p>\n\n\n\n<p>Further, the Company will endorse\nthe Transferee\u2019s name behind the Share Certificates.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Things_to_Remember_in_the_Transfer_of_Equity_Shares\"><\/span>Things to Remember in the Transfer of Equity Shares<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/09\/Things-to-Remember-in-the-Transfer-of-Equity-Shares-1024x768.png\" alt=\"Things to Remember in the Transfer of Equity Shares\" class=\"wp-image-13373\" width=\"510\" height=\"383\" srcset=\"https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/09\/Things-to-Remember-in-the-Transfer-of-Equity-Shares-1024x768.png 1024w, https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/09\/Things-to-Remember-in-the-Transfer-of-Equity-Shares-300x225.png 300w, https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/09\/Things-to-Remember-in-the-Transfer-of-Equity-Shares-768x576.png 768w, https:\/\/swaritadvisors.com\/learning\/wp-content\/uploads\/2020\/09\/Things-to-Remember-in-the-Transfer-of-Equity-Shares.png 1200w\" sizes=\"(max-width: 510px) 100vw, 510px\" \/><\/figure><\/div>\n\n\n\n<p>The <strong><em>things to remember <\/em><\/strong>in the <strong><em>Transfer of Equity Shares<\/em><\/strong> are as follows:<\/p>\n\n\n\n<ol><li>A <strong><a href=\"https:\/\/swaritadvisors.com\/private-limited-company-registration\" class=\"text-primary\">Private Company<\/a><\/strong> is not allowed to transfer its shares;<\/li><li>&nbsp;The parties must cancel the stamps affixed before signing the transfer deed;<\/li><li>The parties must sign the share transfer deed in front of the Witnesses;<\/li><li>The witnesses must give their name and address, sign the document;<\/li><li>Minor Mistakes will not result in the cancellation of the Share Transfer Deed;<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Penalty_for_Non-Compliance\"><\/span>Penalty for Non-Compliance<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In case of any default or violation is made in complying with the regulations and provisions related to transfer of equity shares, the company will be punishable with a fine which will not be less than Rs 25000, but the same may extend to Rs 500000. <\/p>\n\n\n\n<p>Further, every officer of the company who is a part in default will be punishable with a fine, which shall not be less than Rs 10000, but the same may extend to Rs 100000.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In a nutshell, the \u201cTransfer of Securities\u201d denotes a process in which a shareholder or a member of a company voluntarily handover his\/her shares back to the company. In other words, a shareholder decides to terminate his\/her shareholding in a company.<\/p>\n\n\n\n<p>Further, Section 56 of the Companies Act 2013 acts as the Governing Laws for the Transfer of Shares. Moreover, only a public company is allowed to transfer its shares.<\/p>\n\n\n\n<p>In case of any other doubt, reach out to <a class=\"text-primary\" href=\"https:\/\/swaritadvisors.com\/\"><strong>Swarit Advisors<\/strong><\/a>, our experts will not only give a lucid understanding but will assist you in the process of Transfer of Equity Shares as well.<\/p>\n\n\n\n<p><b>Also, Read:<\/b> <mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/learning\/sebi-guidelines-for-ipo-guidelines-for-making-public-offer-in-india\/\">SEBI Guidelines for IPO: Guidelines for Making Public Offer in India<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The term \u201cTransfer of Equity Shares\u201d denotes a procedure under which all the rights and duties of a shareholder or a member are voluntarily handed over back to the company. Further, this process is undertaken by the shareholder at the time when he\/she does not wish to continue his\/her shareholding. In this blog, we will [&hellip;]<\/p>\n","protected":false},"author":17,"featured_media":13368,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[546],"tags":[943],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/13367"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/users\/17"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/comments?post=13367"}],"version-history":[{"count":20,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/13367\/revisions"}],"predecessor-version":[{"id":16695,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/13367\/revisions\/16695"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media\/13368"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media?parent=13367"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/categories?post=13367"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/tags?post=13367"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}