Apply Transfer of Shares Online | Easily Transfer Ownership through Expert Guidance and Assistance

Overview

A transfer of shares refers to the process of voluntary transferring a company’s ownership from one party to another. It is important for businesses if they are planning to change the structure of shareholders. One can get transfer of shares done online and it doesn’t matter whether the transfer of shares is occurring through sale, gift or exchange.

What is a Transfer of Shares?

A transfer of shares is a process that involves moving the legal ownership of shares from one individual to another. Transfer of shares can be also done from one entity to another. The transfer of shares can be executed through a sale or a gift and thus it is an important step for corporate governance and business restructuring.

Types of Transfer of Shares

#. Voluntary Transfer

Voluntary transfer happens when a shareholder willingly transfers their shares, typically by selling or gifting them.

#. Involuntary Transfer

Involuntary transfer of shares happens when events like insolvency or death of a shareholder occurs. It is also known as transmission of shares.

Legal Requirements for Transfer of Shares

One must adhere to the requirements outlined in a company's Articles of Association (AoA) and the Companies Act, 2013 to legally transfer shares. Following are the essential requirements for transfer of shares process:

Proper execution of the transfer deed (Form SH-4)

Compliance with restrictions in the AoA, if any

Payment of applicable stamp duty

Approval by the board of directors

Procedure for Transfer of Shares

#1. Prepare for Transfer Deed

The Transfer Deed is like an application form for Transfer of Shares. The form is known as Form SH-4.

#2. Shareholder’s Signature

The transfer deed needs to be signed by both the transferor and transferee to authorise the transfer deed

#3. Stamp Duty Payment

Stamp Duty needs to be paid and it is based on the share transfer consideration.

#4. Board Approval

The next step is to get board approval, which means the company's board of directors must approve the transfer of shares and update the register of shareholders.

#5. Issuance of Share Certificate

After getting approval from the government, the company can issue a new share certificate to the new shareholder.

Documents Required for Transfer of Shares

#1. Duly filled and signed Form SH-4

#2. Share certificates of the company

#3. PAN card and address proof of the transferee

#4. Stamp duty evidence

Stamp Duty on Transfer of Shares

The stamp duty on share transfers is determined at 0.015% of the entire consideration value. To have the transfer legally acknowledged, this duty must be paid to the government.

Common Challenges in Transfer of Shares

#1. Restrictions in the AoA: Some firms include restrictive provisions that prohibit or limit the transfer of shares.

#2. Improper documentation: Missing or improperly completed transfer forms might cause delays in the procedure.

#3. Stamp Duty Issues: Incorrect stamp duty paid or failure to pay may invalidate the transfer.

Tax Implications of Transfer of Shares

The transfer of shares may have taxation consequences, such as capital gains tax. If the selling of shares generates profits, the seller may be required to pay short-term or long-term capital gains tax, depending on the holding duration of the shares.

Difference Between Transfer and Transmission of Shares

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Why Choose E-StartupIndia?

At E-StartupIndia, we ensure that your transfer of shares process goes easily and effectively. Our team of professionals with decades of experience, provide complete services to help you navigate each step. We assist you in avoiding any complications by drafting necessary documentation and guaranteeing complete legal compliance.

Whether you're a new or existing firm, we offer personalised services to match your requirements. Our professionals have extensive expertise managing share transfers, ensuring that all legal requirements are met and the procedure is completed effectively. In addition, we offer continuous support to help you stay compliant.