When a shareholder wants to transfer their shares, they must complete a Share Transfer Form. The procedure for the transfer is different for each situation. A shareholder who wishes to transfer their shares must confirm how many shares they will keep and how many they are willing to transfer. Usually, the transfer process takes place following an agreement between the shareholder and the company board. The Board of Directors must approve the transfer in order to complete the process. The shareholder must also obtain the Board’s approval prior to transferring shares.
A shareholder can transfer their shares to another person if the share price is the same or higher than what the previous owner paid. In such a case, the transfer must be done through an intermediary. The transfer agent will act as a tender agent and exchange agent. They will also be responsible for processing the application form for the transfer. Upon approval, the transferee’s name will appear in the Register of Members. A shareholder can transfer their shares only after the share certificate is registered in the Register of Members.
If a business owner wants to transfer his or her shares, he or she must first review the articles of association to ensure that the share can be transferred without any legal complications. The transferor must also make sure that the new shareholder’s name will be on the company’s register of members. In addition to this, the transferee must be notified of the transfer. If no other shareholders show interest in the transfer, the company will process the transfer.
The transfer of shares should be legally binding, so both parties must sign the transfer deed. The transferee’s name and address must be witness by someone. The share transfer deed must be witnessed by a witness and must be duly executed. Once signed, the share transfer deed cannot be refused. In some cases, the share transfer deed has to be witnessed by a third party. The deed will not be valid if a minor mistake is made on the share transfer form.
Before transferring a share, the transferee should make sure that the value of the share is stated on the deed. If this is not done, the transfer deed is still valid. During the transfer process, the company will also pay stamp duty on the value of the shares. The stamp duty is 0.25% of the value of the shares. Stamp duty is also not paid on shares sold by a nationalised bank.
Transferability of share is one of the basic requirements for the company form of business. However, private companies have some restrictions when it comes to transferability of shares. The Article of Association, guides the transfer of shares. For example, Section 2(68) of the Companies Act, 2013 restricts the transfer of shares to the public. In addition, it also prohibits invitations to the public to subscribe to the securities of the company. This section is not applicable to a transfer in a family arrangement.
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