Transfer of shares

This article describes about the procedure of transfer of shares.

Meaning: It is the change of ownership of shares to someone else with due registration with the company. It is a process of changing a title to shares with the approval of the company.

There are two parties involved in the transfer of shares. The one who transfer the share in the name of another person is known as transferor and the person to whom the share are transferred is known as transferee.

Procedures regarding Transfer of Shares:

(1) Verification of legal provision: The secretary has to check if there is a provision in the Articles of Association regarding the transfer of shares. If there is a provision in the Articles, he will go ahead regarding the transfer of shares, if there is no provision he cannot go ahead with the procedure of transfer of shares.

(2) Receipt of documents for transfer: The transferor and transferee jointly, submit the share transfer form duly completed, signed and stamped for the purpose of transfer at the company's office. The share certificate is also submitted.

(3) Verification of transfer documents: The secretary has to check the transfer documents submitted by the transferor and the transferee. He has also to see that the share certificate has been attached along and it is certified one and it is submitted within the prescribed time limit. The secretary should also verify all the details given in the transfer documents and see if they are in order.

(4) Acknowledgment of instrument of transfer: The secretary issues a 'Kutcha Receipt' acknowledging receipt of the instrument of transfer. He has to check the documents received and if he is satisfied then issue a formal "Transfer Receipt" to the transferor in exchange for the Kutcha receipt.

(5) Issue of notice of transfer to transferor and transferee: The secretary then issues a notice of lodgement of transfer to the transferor and transferee requesting them to send their objection, if any within fourteen days after they receive the notice.

(6) Entry in the transfer register: If no objections have been received by either the transferor and the transferee, the secretary then enters the details of the transfer in the Transfer Register. He has to get the old share certificate endorsed in the name of the transferee.

(7) Board meeting for the approval of transfer: A meeting of Board of Directors will be called. In this meeting, a resolution will be passed regarding the transfer of shares. Once the resolution has been passed, the secretary has to remove the name of the transferor from the Register of members and include the name of the transferee.

(8) Intimation to Transferee and dispatch of share certificate: Once the transfer is initiated, the secretary will inform the transferee about the transfer and that the share holders may come and collect his new share certificate or endorsed certificate against the transfer receipt. For those transferees who cannot come to collect the new share certificate, it will be sent to their registered addresses as per the instructions of the transferee.

These were the procedures need to be followed by the secretary while transferring the shares of a particular shareholder


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