Share Transfer
The ownership structure of a Private Limited Company in India is determined by its shareholding pattern. To onboard new investors or facilitate a change in ownership, shares of the company must be transferred. Selling the company's stake can be a strategy to entice fresh investors or transition control of the firm.
- Share transfer entails the voluntary transfer of both rights and potentially responsibilities from one company member to another. This shift occurs when an existing shareholder opts to exit the company, passing their rights and duties to an individual eager to become a member.
- Consequently, company shares are transferable akin to other movable assets, unless specified restrictions are outlined within the Company's Articles.
- Subscribers to the memorandum
- The legal representative in the case of a deceased
- Transferor
- Transferee
- Company (Whether listed or unlisted)
For the transfer of shares in a Private Limited Company, specific procedures and restrictions must be adhered to. Here's a step-by-step guide:
- Begin by acquiring the share transfer deed in the designated format, ensuring it's signed by both the transferor and transferee.
- Authenticate the share transfer deed with your name, address, and signature.
- Attach the transfer document or allocation letter alongside the share certificate, forwarding it to the company for processing.
- Upon approval, the company will issue a new certificate to the transferor.
- The transferor initiates a request to the company for the share transfer.
- The company will notify all existing members of the shareholder's intent to transfer shares.
- If no current member expresses interest, the company informs the transferor about the possibility of selling shares to an external party.
