Transfer of shares- General Background:

The ownership of a private limited company is determined by the shareholding of the Company. To introduce new investors or transfer ownership of the Company, the share of the private limited company would have to be transferred.

It is basically handing over the rights and duties of a member of the company to any other person who wishes to become a member of the company. It is a voluntary act of a member that is accompanied according to the articles mentioned in the AOA of the company.

Procedure for Transfer of shares -In case of Private Company

STEP:1 CHECK SHARE TRANSFER RESTRICTION IN AOA OF THE COMPANY:

A private limited company considered to be a “closed corporation” of members. Therefore, the share transfer in a Private Limited Company could be restricted by the Articles of Association (AOA). Hence, the AOA of the Company must be reviewed prior to beginning the share transfer procedure.

Step:2 Execution of share transfer deed duly signed by the Transferor and Transferee.

Step :3 the person proposing to transfer any shares shall give notice in writing to the Company_ INTIMATION NOTICE

Step:4 Execute share transfer deed_SH-4.

Step:5 Pass Board Resolution, for the approval of Transfer of share from the transferor to the transferee.

Step:6 Endorsement on the backside of the share certificate.

Step:7 Delivery of Share certificates.

List of Documents required for Transfer of shares:

  1. Intimation Letter (Transferor should give a notice in writing for his intention to transfer his share to the company.),
  2. Consent Letter (Company to the shareholder),
  3. Execution of Share Purchase Agreement between Transferor and Transferee, deciding terms and conditions for the transfer of shares.
  4. Have a witness sign on the share transfer deed with his/her signature, name, and address.
  5. Execute the share transfer deed_SH-4 duly signed by the Transferor and Transferee.
  6. Value of share transfer stamps to be affixed on the transfer deed as per the Indian Stamp Act and Stamp Duty Notification in force in the State.
  7. Attach the share certificate or allotment letter with the transfer deed and deliver the same to the Company.
  8. Pass Board Resolution, after Receiving SH-4-Share transfer deed.
  9. Endorsement on the backside of the Share certificate of the transferor, with the respective name of the transferee.

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