What is transfer of share? Explain the procedure of transfer of

What is transfer of share? Explain the procedure of transfer of shares. What is the difference between transfer and transmission of share?

Ans.

MEANING OF TRANSFER OF SHARES

According to Section 44 of the Companies Act, 2013. the shares of a company are movable property, transferable in the manner prescribed in the Act and the Articles of the company In Thenappa Chettiar v. Indian Overseas Bank Ltd., (1943) 13 Comp. Cas. 202, it was observed that “the right of a shareholder to transfer his shares in a company is absolute as it is inherent in the ownership of the shares, but it can be restricted by contract which has to be found in the Articles of Association of the company.”

PROCEDURE OF TRANSFER OF SHARES

(a) By the Shareholder:

1. Transfer deed duly presented to the ROC.

2. The details of shares to be transferred i.e. distinctive numbers, share certificate number, No. of shares, folio number etc. are to be filled in the dead.

3. The deed then be signed by the shareholder or his power of attorney holder by witnessed by someone.

4. The share certificate or letter of allotment, particulars of which are mentioned in the deed shall be attached with the deed and handed over to the purchaser or broker.

The company should ensure that the deed is lodged within a period of 60 days from the date of execution as prescribed by Section 56(1) of the Companies Act, 2013. However, the Central Government has the power to extend time.

(b) By the Broker:

1. The broker may sell the shares in the stock market and subsequent the purchaser may get the shares registered in his name with the company the broker even may get the shares registered in his name.

2. For the purpose of registering the share, the purchaser shall fill in the transfer deed, his details as transferee and shall execute the deed.

3. Stamp duty shall be affixed at the appropriate place in the transfer deed and be cancelled.

4. The transfer deed along with the share certificate, letter of allotment shall be forwarded to the company or its shares transfer agent by registered port with acknowledgement due to prevent loss.

5. In case of listed companies the transfer deed should be sent to the company within 12 months from the date of presentation by the prescribed authority or before first closure of register of members whichever is later.

(c) By the Company:

1. On receipt of transfer deed the company shall forthwith send an acknowledgement of receipt of documents.

2. The validity of deed shall be checked and the details mentioned in the deed and the share certificate/letter of allotment are to be checked thoroughly.

3. To see whether stamp duty has been adequately paid and the share transfer stamps have been cancelled.

4. If alteration is made in the deed it should have been initialized.

5. To verify whether any court order is persisting against transfer of shares or any “stop transfer” advice has been noted against the shares by any body.

6. If the shares are partly paid up the notice should be given to the transferor and the transferee for the same.

Where transfer is duly approved endorsement will be made in favour of transferee and will be certified by the secretary.

If company within 2 months does not register the transfer, the aggrieved party can make an application to NCLT. NCLT grants a hearing to the concerned parties.

Section 56(1) says that every company shall within 60 days will issue share transfer certificate.

DIFFERENCE BETWEEN TRANSFER AND TRANSMISSION OF SHARES

Sl. No.	Basis of Difference	Transfer of shares	Transmission of Shares
1.	Operation	Transfer of Shares is effected by a voluntary act of the parties.	Transmission of shares takes place by enforcement of law.
2.	Instrument	The transferor executes an instrument of transfer of shares.	In it, there is no prescribed instrument of transfer.
3.	Liability Abolishion	When transfer is complete, the liability of transferor ceases.	In the case of transmission., shares continue to be subject to the original liabilities.
4.	Consideration	Transfer of shares takes place for consideration.	No consideration is involved in it.