Transfer of Shares

Transfer of Shares

The ownership rights in a company can be transferred, but this transfer is subject to certain restrictions outlined in the company’s Articles of Association (AOA) or governed by the Companies Act. Nevertheless, the process of share transfer is generally straightforward and uncomplicated. Assuming all parties are available for signature, the task can be completed within the same day.

Preparation to Initiate Share Transfer

• Check for restrictions in the AOA
• First, offer shares to existing members
• Enter into a Share Transfer Agreement
• If they The transfer of Shares are restrict
• The share transfer form is SH-4 (Sec 56)

Documents Required For Transfer of Shares

Thorough and well-prepared documentation is crucial for expediting the company registration process. Below is the list of required documents from the directors and for the company’s registered address during the incorporation procedure. Please provide self-attested copies of these documents, ensuring they are clear and valid. This will help streamline the incorporation process efficiently.

1. Share Transfer Origination Certificate
2. Proof of Stamp Duty Payment (Franking) for Share Certificate Issuance
3. Valuation Report and Share Transfer Agreement
4. Signed Share Transfer Form by All Parties
5. Transferor and Transferee Identification (ID) and Address Verification
6. Evidence of Consideration Payment for the Transfer, if Applicable

Transfer of Share Process

STEP 1 – Notice of Share Transfer Intention

The seller submits a written notice to the company, expressing the intention to transfer the shares. Existing members of the company are informed and given the opportunity to purchase the shares.

STEP 2 – Transfer Documentation

Once the transfer deal is finalized, and the transfer’s value is fixed, prospective buyers fill out Form No- SH.4. The transferor and transferee sign the form in the presence of a witness. The transferor then hands over the share certificate and SH-4 to the transferee. The necessary stamp duty for share transfer is paid by affixing share transfer tickets on the form.

STEP 3 – Transferor Submits Share Transfer Form and Certificate to Company

Once the transfer is executed, witnessed, and duly stamped, the transferee requests the company to update the register of members, replacing the transferor’s details with their own. The company then records the transfer.

STEP 4 – Issuance of New Share Certificate by the Company

Following the board of directors’ approval, the share transfer is recorded in the register of share transfers, and a new share certificate is issued in the name of the new member of the company.

Registered Office Requirement During Company Registration

At the time of incorporating a company, it is imperative to officially declare its registered office. To finalize the location for your company’s registered office, you must submit the following necessary documents:

1. Water Bill/Electricity Bill
2. Property Tax Receipt
3. No Objection Certificate (NOC) obtained from the landlord regarding the Registered Office
4. Lease agreement between the landlord and the company

It is crucial to ensure that the name and address provided on the electricity bill, water bill, and property tax receipt match the details mentioned in the NOC certificate provided by the landlord and also specified in the rental agreement.

It is important to note that vacant land or buildings under construction cannot be designated as the registered office for a company. However, it is not mandatory to declare the registered office as a commercial or industrial property; a residential property can also serve as the registered office for the company.

Procedure for Change in Registered Office Address

Let’s dig in and go through the procedure that needs to be followed during the change in registered office address as provided in the Companies Act, 2013:

Procedure for Change within the Same State:

1. Conduct a Board meeting and decide on the change.
2. File Form INC-22 with the ROC within 15 days from the resolution’s date.

Documents Required with Form INC-22:

1. Copy of the current registered office address.
2. Copies of utility bills (not older than 2 months).
3. NOC from the premises’ owner.

Procedure for Change Outside the Existing City/Town/Village:

1. Conduct a Board meeting to fix the date, time, and venue for an Extra Ordinary General Meeting (EGM).
2. Pass a resolution for the change in office address during the EGM.
3. File Form MGT-14 with the ROC within 30 days from passing the resolution.

Documents Required with Form MGT-14:

• Certified copy of the resolution.
• File Form INC-22 within 15 days of passing the decision with the ROC.

Documents Required with Form INC-22:

• Copy of the new registered office address.
• Copies of utility bills (not older than 2 months).
• NOC for the use of the area obtained from the owner.
• Special Resolution.

Procedure for Change between Different ROCs within the Same State:

1. Conduct a Board meeting to determine the date, time, and venue for an Extra Ordinary General Meeting (EGM).
2. During the EGM, make a special decision for the alteration of MOA and the shifting of the Registered Office.
3. Publish advertisements in English and Vernacular newspapers, stating the updated address of the company’s registered office.
4. File Form MGT-14 with the ROC within 30 days from the decision.

Documents Required with Form MGT-14:

1. Certified copy of the EGM’s decision.
2. Submit an application to the Regional Director in Form INC-23.
3. Publish a notice in a daily newspaper in English and the principal language of the district where the registered office is situated.

Send individual notices to each debenture holder, depositor, and creditor of the company, indicating the proposed alteration in MOA and its potential impact on their interests.