Share Transfer
A share transfer is the process of legally transferring ownership of shares from one person or entity to another. It involves executing a share transfer form, paying applicable stamp duty, and updating the company's register of members to reflect the new shareholder.
Private Limited Company Share Transfer with Easy My Tax
Share transfer in a Private Limited Company is the process where ownership of shares is moved from one person to another. Shares represent ownership in the company, and transferring them means changing who holds this ownership. In India, this process is regulated by the Companies Act 2013 and rules issued by the Ministry of Corporate Affairs (MCA).
Easy My Tax helps you carry out the share transfer process in compliance with all legal requirements, ensuring a smooth and efficient transfer.
What is Share Transfer?
Share transfer means a shareholder sells or gives their shares to someone else. This transfers the rights and responsibilities of owning those shares to the new person. The transfer is similar to selling any movable property but must follow specific rules set by the company’s Articles of Association (AOA).
Key Regulations for Share Transfer in Private Companies
The Companies Act, 2013 governs share transfers in private companies, mainly under Section 56 and relevant rules. The company’s Articles of Association play a vital role in setting the detailed procedures and any restrictions on transferring shares.
Important Points About Share Transfer in Private Companies
- Existing shareholders usually get the first chance to buy the shares before they can be sold to outsiders. This is called pre-emptive rights.
- The directors may have the power to accept or reject a share transfer, depending on the company’s Articles.
- Transfers must follow the process laid out in the company’s Articles and comply with the law.
Who is Involved in the Share Transfer Process?
- The shareholder transferring the shares (transferor)
- The person receiving the shares (transferee)
- The company whose shares are being transferred
- Legal representatives if the shareholder has passed away
Documents Required for Share Transfer
- Share Transfer Deed signed by both buyer and seller
- Original Share Certificate from the seller
- PAN card copy of the buyer
- Board Resolution approving the transfer
- No Objection Certificate from the seller (if required)
- Indemnity Bond from the seller (if required)
- Payment of applicable stamp duty on the share transfer deed
Share Transfer Procedure in a Private Limited Company
- Review the company’s Articles of Association for transfer rules and restrictions.
- The shareholder informs the company director about the intention to transfer shares.
- The share price is decided based on the company’s rules, usually set by directors or auditors.
- Existing shareholders are informed and given priority to buy the shares.
- If no shareholder takes the shares, they may be offered to outsiders.
- The share transfer deed (Form SH-4) is prepared and signed by both parties.
- The deed is stamped as per the Indian Stamp Act rules.
- A witness signs the transfer deed for validation.
- The transfer deed and share certificate are submitted to the company.
- The company verifies the documents and issues a new share certificate to the buyer.
How Easy My Tax Supports Your Share Transfer
Easy My Tax guides you through every step of the share transfer process. From checking your company’s Articles of Association to preparing and filing all necessary documents, we make sure your transfer is legally compliant and hassle-free.
Reach out to Easy My Tax today to get expert help with your Private Limited Company share transfer and ensure a smooth transition of ownership.
