Company share Transfer
A company is based on ownership and it can be shared or individual ownership. In order to include new investors or transfer ownership of the company, the share of any would have to be transferred. A unique thing about a registered company is that its shares can be transferred.
Section 2(68) of the Companies Act 2013 provides that the Articles of a private company shall restrict the right to transfer the company’s shares. Transfer of shares is restricted by the articles of association of a private limited company, the shares to be transferred first offered to the existing members of the company. The entire process of share transfer is a little complicated given stringent provisions of the company law and applicability of state stamp act which differs from state to state.
How to transfer company share?
Procedure of Share transfer of a company
Connect with our team for easy steps in company share transfer
- The procedure for transferring company shares entirely depends on the existing Board of Director’s decisions as they are the central part of any company. The board of directors and shareholders must discuss the share of transfer before coming on any final decision. Shareholders must also give notice in writing to the Director of the Company about the intention to transfer shares of the company.
- The second step is to review the Articles of Association (AOA) of the Private Limited Company all the restrictions must be removed. Once you come on a final decision of whether to transfer shares or borrow money from external sources. If there is no clause of company share transfer then our team will guide in adding this clause in AOA.
- After the Board Resolution is passed to transfer shares, our team will review the present shareholdings of the Company and the (A0A) Articles of Association to understand the background of the Company prior to beginning the process. The price will be determined as per the Articles of Association at which the shares of the Company will first be offered to present shareholders of the Company.
- We will help you to prepare all the necessary documents regarding company share transfer and issuing of shares to the new shareholder.
Which company shares are freely transferable?
A public company shares are freely transferable. According to the companies act, 1956 states that especially the shares of a public company are freely transferable.
What is a share certificate and how it is issued?
A share certificate is a certificate issued by the company that certifies that when the certificate is issued to a person then that certain person is the registered owner of shares in the company.
Can I sell my shares in a limited company?
According to the companies’ act 2006, conditions mentioned in the company’s articles of association and shareholder agreement, the shares can be transferred or sold to the other person. To transfer the shares a stock transfer form must be completed.
Do the share certificates expire?
No, the share certificate does not have an expiry date. However, there may be various reasons in which the shares of a particular company stop having any value.
What information does the share certificate hold?
Share certificate holds the primary information about the name, address or the number of shares held by a person
Is a share certificate proof of ownership?
A share certificate is the written documents signed on behalf of the company and serves as legal proof of the ownership of shares. A share certificate is also known as a stock certificate.
How can I add new shareholders to my private limited company?
You can add shareholders to your company at any point after incorporation. In order to add the shareholders, the existing shares need to be transferred or sold by the existing shareholder to the new shareholder
Who can issue the share certificate?
The share certificate is issued by the company stating that the name of a person on the certificate is the owner of the shares of the company.
What can be the reasons for the share transfer?
Shareholders want to exit the company by transferring the shares to existing third parties
Succession planning (transferring shares to siblings or spouses)