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Procedure / Steps To Be Followed By The Company With Regard To Transfer Of Shares

Registration Of Transfer

The company shall register transfer of shares, only when:

• Proper Instrument of transfer, has been duly stamped
• It has been properly executed b transferor, and transferee
• Name, address and occupation of transferee has been delivered to the company.
• Share certificate or letter of allotment has been delivered alongwith instrument of transfer.
• Central Government has prescribed the form for transfer, which should be used in the case of all transfers of shares of a company, including a private company. The form contains the entire particular required.

Acknowledge

When, the company received all the requisite documents it generally gives an acknowledgement for the same.

If the instrument of transfer is received from a person other than the transferor and the shares are partly paid -up, the company has to send a notice to the transferee, and it may also send a notice to the transferor.

Time Limit

Before effecting any transfer, the company should ensure that the instrument is lodged within the time limit as follows:

Shares Transferred Through A Prescribed FormShares Dealt In Or Quoted On A Stock Exchange

Instrument of transfer, alongwith requisite documents, should be delivered, at any time before the date on which the register of members in closed, for the first time after the date of the presentation of the prescribed form before the prescribed authority. Or

Within twelve months from the date of such presentation, whichever is later.

In Other Case: (i.e. where shares are not quoted on a stock exchange)
In such a case, within two months from the date of such presentation.

The above said time limit is only where shares are transferred through a "Prescribed form"

Shares Transferred Through Unprescribed Form

In such cases, the instrument of transfer, alongwith documents should be delivered within the expiry of six months from the date on which the register of members is closed.

Such period as stated above can be extended, by making an application to central government.

If Transferee Is Minor

If, transferee is a minor, transfer of shares is to be effected in accordance with the provisions of the Articles of Association of the company, where shares to be transferred are fully paid-up, there is no problem for companies to register the same. In favour of minors through guardian.

• After making through scrutiny the officer in charge will put his initial on the form and the particulars of the transfer instrument will be entered in the Shares Transfer Register.
• At periodic intervals, the Share Transfer Register, alongwith necessary document will be put up before Board or Committee, and they shall initial the Share Transfer Register for having approved the transfer. The date of approval of the transfer will be indicated in the register.
• Where transfers are duly approved, endorsements will be made on the share certificates in favour of the transferees and will be certified by company secretary or an officer authorised by the Board in this behalf. After doing so, the share Certificates will be returned to the sender alongwith a covering letter. Where new certificates are to be issued, they have to be issued in conformity with the companies ( issue of share certificates) Rules, 1960
• Finally necessary entries shall be made in the Register of Members in regard to the transferor and the transferee.

  If the company refuses to register the transfer of shares, it shall send a notice intimating the refusal to the transferor and transferee.

• On entry of the transferee's name in "Register of Members", he becomes entitled to dividend and other bonus or share in surplus, as may be declared.