Updated on September 04, 2023 11:41:04 AM
Share Transfer procedures in a Pvt Ltd Company is a systematic way of transferring the ownership of shares from one owner to the other. Shares are the units of ownership in a company, and they can be bought, sold, or transferred. The shares in a private limited company are not traded publicly, it can only be sold or transferred to others. File ROC compliances for Pvt Ltd Company with Professional Utilities.
The transfer of shares in a private limited company in India is governed by the Companies Act, 2013, and the rules and regulations prescribed by the Ministry of Corporate Affairs (MCA). In this blog post, we will discuss the procedure for share transfer in a private limited company.
In a Private Limited Company, the transfer of shares is restricted to the company's Articles of Association (AOA). The AOA must be reviewed before any share transfer process begins.
Only the restrictions specified in the Articles of Association are legally binding, and any private agreements between shareholders are not binding on the company or the shareholders. The right to transfer shares cannot be completely prohibited or banned, as it is not permissible under the law.
The process of transfer of shares in a Private limited company is given below:
The first step in the share transfer process is to obtain a Share Transfer Deed, which is a legal document that transfers the ownership of shares from the transferor (seller) to the transferee (buyer). The Share Transfer Deed should be executed by both parties and must be stamped and signed in accordance with the Indian Stamp Act, 1899.
The Share Transfer Deed should contain the following details:
The transferor should obtain a No Objection Certificate (NOC) from the company, which confirms that the company has no objection to the transfer of shares. The NOC should be obtained within two months of the execution of the Share Transfer Deed.
The transferor should submit a written request to the company along with the original share certificate, the Share Transfer Deed, and the prescribed fee. The company will verify the documents and issue the NOC if there are no objections.
The transferor should submit the Share Transfer Deed, along with the original share certificate and NOC, to the company within 60 days of the execution of the Share Transfer Deed.
The company will verify the documents and update its records to reflect the transfer of shares. The company should also issue a new share certificate in the name of the transferee.
The board of directors of the company will consider the transfer request and approve or reject it based on the provisions of the Articles of Association and the applicable laws and regulations.
If the transfer is approved, the board will record the transfer in its minutes and update the shareholders' register.
The Share Transfer Deed is subject to stamp duty, which is payable as per the applicable rates in the respective state. The stamp duty should be paid before the transfer documents are submitted to the company.
The company should file the necessary forms with the Registrar of Companies (RoC) within 30 days of the transfer of shares. The forms to be filed include Form SH-4 (for transfer of shares) and Form MGT-7 (for filing annual returns).
The following are the documents required for share transfer in a Private Limited Company:
It is advisable to consult with a professional to ensure that all the necessary documents are in order and that the share transfer process is executed smoothly and in compliance with applicable laws and regulations. You may contact our team at Professional Utilities for the share transfer process and Company Incorporation.
In conclusion, the transfer of shares in a private limited company involves several steps and compliances. It is advisable to seek professional guidance and assistance to ensure compliance with the applicable laws and regulations and to avoid any legal issues or disputes. A company secretary or a legal professional can help you navigate the share transfer process smoothly and efficiently.
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