Transfer of Share

The ownership of a private limited company is determined by the shareholding of the company. There may be times when you require to change the share structure of your company either by changing the existing proportion of shares between shareholder or by adding a new shareholder or by changing the current proportion of shares between shareholders. A share transfer is a process of transferring existing shares from one person to another.

[wpforms id=”1258″ title=”false” description=”false”]

Transfer of Share in Private Limited Company

Shares are transferable property, and they are transferable in the manner provided by the articles of the company. Sometimes businesses need the transfer of ownership. In other words, if the owners desire to transfer the ownership, it can be done by following due procedure that needs to be followed to transfer the share.
Shares can be transferred from a shareholder to another person, either a new or existing shareholder. Generally, shares are transferred to introduce a new shareholder. In private limited company for share transfer, the preference is given to the existing shareholders and then to the outsiders.

Shares Transfer Procedure in a Private Limited Company

Step 1 – Review Articles of Association (AOA)

Going through the articles of association of the company to check that Articles of Association does not contain any restriction on transfer of the share.

Step 2 – Notice to Board of Director

The existing shareholder must give notice in writing to the BOD of the Company about the intention to transfer the share of the company.

Step 3 – Consent form existing Shareholders

If any of the present shareholders come forward for the purchase of shares, shares should be allotted to them. In case no current shareholder is interested, the same can be transferred to the outsider.

Step 4 – Obtain Share transfer deed

Obtain the share transfer deed in the prescribed format. Executing the share transfer agreement duly signed by the Transferor and Transferee.

Step 5 – Stamping the deed

Stamping of the share transfer agreement is necessary as per the Indian Stamp Act and it should have a witness signature on the share transfer agreement with his/her name and address.