Overview

Share Transfer is the process of legally transferring shares from one shareholder to another in a Private Limited Company. This ensures smooth ownership changes while complying with the Companies Act, 2013. Company Mitra simplifies the share transfer process by managing documentation, approvals, and compliance requirements, ensuring a hassle-free and legally valid transfer.

Requirement

• A valid share transfer agreement between the seller and buyer.
• Execution of Share Transfer Deed (Form SH-4) with proper stamp duty payment.
• Board Resolution approving the transfer.
• Updated Register of Members reflecting the changes.

Benefits

• Legally validates ownership transfer within the company.
• Ensures compliance with MCA & ROC regulations.
• Maintains transparency in company records.
• Helps in investment or exit planning for shareholders.

Types of Share Transfer:

• Sale: Shares are transferred through a sale agreement, involving payment from the transferee to the transferor.
• Gift: Shares are transferred without any consideration (payment) as a gift.
• Inheritance: Shares are transferred to beneficiaries upon the death of the shareholder according to inheritance laws.

Process of Share Transfer:

1. Agreement & Documents:
   • Both parties agree on the transfer terms and conditions through a share transfer agreement.
   • Transferor provides required documents like share certificates, proof of ownership, and KYC documents.
2. Company Involvement:
   • The company is notified of the transfer and verifies documents.
   • Board approval may be required in certain cases.
   • The company updates its share register with the new ownership details.
3. Government Approvals:
   • Depending on the jurisdiction and type of company, government approvals might be necessary.
   • Stamp duty on the transferred shares may be applicable.
4. Completion & Notification:
   • Once formalities are fulfilled, the transfer is complete.
   • The transferee receives new share certificates (physical or dematerialized) reflecting their ownership.
   • The company and relevant authorities (if involved) are notified of the completed transfer.

Key Considerations:

• Regulations: Different countries and states have specific regulations governing share transfers. Complying with relevant laws and procedures is crucial.
• Company procedures: Each company may have its own internal procedures and requirements for share transfers. Familiarize yourself with these before initiating the process.
• Tax implications: Capital gains tax or other tax implications may arise depending on the nature of the transfer. Consult a tax advisor for guidance.
• Due diligence: Both parties should conduct due diligence to ensure the validity of the transfer and avoid potential legal issues.
• Professional advice: Seeking professional advice from lawyers, accountants, or company secretaries can be beneficial, especially for complex transfers.