Share Transfer - Easy Process
Share Transfer Services By Expert Mantra
Transfer shares effortlessly—whether it’s from one person to another, one to many, or many to one.
Simple and straightforward process
Quick and hassle-free execution
Supported by in-house experts
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Share Transfer – An Overview
In a Private Limited Company in India, ownership is determined by its shareholding structure. To bring in new investors or transfer ownership, the company’s shares must be transferred. This process allows businesses to attract investors or shift control as required.
A key feature of companies is that their shares are transferable. Shares and debentures are considered movable property and can be transferred as specified in the company’s Articles of Association, particularly in the case of public companies.
Share transfer takes place through a contract or arrangement between two or more parties. The Companies Act governs both transfer and transmission of securities.
Transfer of Securities: Occurs through an agreement between two or more persons.
Transmission of Securities: Refers to the transfer of ownership due to events such as death, succession, inheritance, or bankruptcy.
Both processes are distinct but governed under the same legal framework to ensure proper handling of ownership changes.
Why Choose Expert Mantra before transfer of Share?
Transfer of Share is quick, easy, and completely online with Expert Mantra – all in just 3 simple steps:
Schedule a call with our compliance experts
Share the required details and documents
Sit back while we handle the registration process for you
Share Transfer: Meaning and Key Participants
What is Share Transfer?
Share transfer is the voluntary process of handing over a shareholder’s rights—and in some cases, responsibilities—to another individual. This usually takes place when a shareholder decides to exit the company, and another person agrees to become a member.
Shares are considered movable property and can be transferred unless specific restrictions are outlined in the company’s Articles of Association.
Who is Involved in Share Transfer?
The share transfer process typically involves:
Subscribers to the Memorandum – Original shareholders of the company
Legal Representative – In case the shareholder is deceased
Transferor – The person transferring the shares
Transferee – The person receiving the shares
The Company – Whether listed or unlisted
Procedure for Transferring Shares in a Private Limited Company
Transferring shares in a Private Limited Company is subject to certain restrictions. The following step-by-step procedure should be followed:
Obtain the Share Transfer Deed
Acquire the deed in the prescribed format.
Ensure it is duly signed by both the transferor and the transferee.
Stamping of the Deed
Stamp the share transfer deed with the name, address, and signature of the concerned parties as per requirements.
Attach Relevant Documents
Attach the transfer deed or allocation letter to the original share certificate and submit it to the company.
Company Processing
The company reviews the documents and processes the transfer request.
If approved, a new share certificate is issued to the transferee.
Notice to Existing Members
The company notifies existing members about the shareholder’s intention to transfer shares.
If no existing member expresses interest, the transferor is allowed to sell shares to a non-member.
Execution of Transfer through Form SH-4
Form SH-4 is the primary instrument for initiating the transfer.
The transferor must submit a duly executed, dated, and stamped Form SH-4 to the company.
The form must include:
Execution date
Company Identification Number (CIN)
Name of the company
Class of securities
Nominal value, amount called up, and amount paid up
Number and distinctive details of the shares to be transferred
Transferor’s details: name, folio number, signature (with witness)
Transferee’s details: name, father’s name, address, email ID, occupation, folio, signature
Stamp Duty Compliance
The transfer instrument must be stamped as per the Indian Stamp Act, 1899.
Registration of Transfer
Once all documents are verified, the company registers the transfer.
A new share certificate is issued and endorsed to the transferee within one month of receiving the transfer instrument.
Procedure for Transfer of Shares in Physical Mode
The transfer of shares in a Private Limited Company through physical mode involves a formal contractual process between the members and the company. It begins with an agreement to sell, followed by the execution of a transfer deed, and concludes with the registration of the transfer.
Transfer Deed: The transferor and transferee must execute a share transfer deed (Form SH-4), duly signed and submitted along with the relevant share certificate. Only compliant instruments are accepted.
Acknowledgement: Companies may acknowledge the instrument and issue a checklist or transfer receipt. If the transfer is initiated by the transferor and partial payment is made, the company should not object within two weeks of the notice.
Scrutiny: All submitted documents are checked for accuracy. Non-compliant documents or mismatched signatures are returned to the transferee.
Approval: The transfer requires approval from the Board of Directors or an authorized committee as permitted by the Articles of Association.
Registration: Registration is essential for the transfer to be legally valid. Upon approval, the transferee’s name is recorded in the company’s register, making them an official member.
Delivery of Share Certificate: The transfer is effective only after registration. The company must deliver the new share certificate within one month, endorsed with the transferee’s name.
Timelines and Penalties for Share Transfer
For Companies with Share Capital:
A company must not register any transfer of shares or ownership interest to beneficial owners without proper instruments within 60 days of execution.Application by the Transferor:
A transfer cannot be registered until the company notifies the transferor within 2 weeks of receiving the notice.No Opposition Certificate – Applicable Timelines:
For subscribers to the memorandum: Within 2 months from the date of incorporation.
Allocation of all company shares: Within 2 months from the date of allocation.
Allocation of debentures: Within 6 months from the allocation date.
Penalties for Non-Compliance
For the Company: Penalty ranges from a minimum of ₹25,000 to a maximum of ₹5,00,000.
For the Officer in Default: Penalty ranges from a minimum of ₹10,000 to a maximum of ₹1,00,000.
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Frequently Asked Questions…
Which form is required to appoint a statutory auditor?
A company must submit Form ADT-1 to the Registrar of Companies (RoC) for the appointment of a statutory auditor.
Which form should accompany the company’s Director’s Report?
The Director’s Report must be filed along with Form AOC-4, which includes the company’s financial statements and other necessary attachments.
Are audited financial statements mandatory for private limited companies?
Yes, audited financial statements are compulsory for private limited companies as part of their annual filing process.
What compliance regulations must a private limited company follow?
Private limited companies must adhere to the Companies Act, 2013, which includes annual filings, statutory record maintenance, board and general meetings, and other prescribed compliances.
How should a company file its annual returns?
Annual returns must be filed online using Form MGT-7 via the MCA (Ministry of Corporate Affairs) portal.
What does annual compliance mean?
Annual compliance is the process of fulfilling all mandatory legal requirements for a financial year, such as filing forms, maintaining records, and completing statutory procedures.
Why is business compliance important?
Business compliance ensures legal standing, avoids penalties, builds trust with stakeholders, and facilitates smooth business operations.
