About Transfer your Share
In India, the process of share transfer refers to the procedure by which a shareholder (transferor) transfers his or her shares in a company to another individual or entity (transferee). Share transfer in India is governed by the provisions of the Companies Act, 2013, and the Articles of Association (AoA) of the company.
Transfer your shares effortlessly at the lowest fees! Legal Helpzyn is a registered company with the Ministry of Corporate Affairs (MCA) and MSME in India. Our skilled team of Chartered Accountants (CAs) and Company Secretaries (CSs), with over 10 years of experience, will ensure all your documentation is prepared and finalized in the same day.
Transfer your Share with Legal Helpzyn
Need Help for Transfer your Share
fill up the below mentioned form
- Any shareholder can transfer shares if the AoA of the company allows for it.
- Restrictions may exist, such as pre-emption rights (the right of existing shareholders to buy shares before they are offered to others), especially in private companies.
- The transferee (new shareholder) should be legally capable of holding shares under Indian law.
- Transfer of Fully Paid Shares: Where the shares have been fully paid for.
- Transfer of Partly Paid Shares: Where the shareholder has paid part of the face value of the shares.
- Transfer in Listed Companies: Involves specific regulatory frameworks for trading and transferring shares on stock exchanges.
- The stamp duty on share transfers is governed by the Stamp Act, 1899.
- The stamp duty for transferring shares in physical form is generally 0.25% of the value of the shares or the face value, whichever is higher.
- For transfers of shares in dematerialized form, stamp duty is typically not applicable, as the transfer is electronic.
- In case of listed companies, the transfer must be done through a stock exchange, and the stamp duty may be waived or adjusted.
- Pre-Emption Rights: In private companies, existing shareholders may have the first right to purchase shares before they are transferred to third parties.
- Approval from the Board/Shareholders: Some companies require the approval of the Board or other shareholders for a share transfer.
- Transfer Restrictions in AoA: The Articles of Association of the company may impose restrictions on share transfers, such as a limit on the number of shares that can be transferred to outsiders or specific transfer procedures.
Document Required for Transfer Share
Transfer Share in Physical Form
- Share Transfer Form (SH-4): Signed by both transferor and transferee.
- Share Certificate(s): Original certificate(s) of shares being transferred.
- Stamp Duty: Applicable on the transfer form (0.25% of the share value or face value).
- Proof of Identity: PAN card, proof of address of both parties.
- Board Approval (if needed): In case of restrictions in the company’s Articles of Association (AoA).
- No Objection Certificate (NOC) (if required): From the company, if there are restrictions.
Transfer Share in Dematerialized (Demat) Form
- Delivery Instruction Slip (DIS): Provided by the Depository Participant (DP).
- PAN Cards: Of both transferor and transferee.
- Proof of Identity/Address: For both parties.
- Demat Account Details: For the transferee (DP ID, Client ID).
- Transaction Charges: Paid to the DP for processing the transfer.
Our Fees
Person To Person
Corporate Entity
Foreign Nationals/ Foreign Entity
Transfer Shares in the Company
- Dematerialized Shares: In the case of listed companies, most shares are held in dematerialized form. Transfers are carried out electronically through a Depository Participant (DP).
- Trading Platform: Shares in listed companies can be transferred only through a recognized stock exchange (such as NSE or BSE).
- SEBI Guidelines: SEBI mandates that all listed companies ensure that share transfers are carried out in a transparent and efficient manner, and investors are protected.
- Private Companies: Share transfers are subject to the restrictions in the company’s Articles of Association. Existing shareholders may have a right of first refusal, and the transfer may require board approval or shareholder consent.
- Public Companies: Shares of public companies can be transferred freely, as long as they comply with the regulations of the stock exchanges and SEBI.
Share Transfer in Case of Death of Shareholder
- If a shareholder dies, the shares are transferred to the legal heirs or the nominee.
- The transfer can be done by submitting a death certificate, the legal heir’s proof of identity, and other necessary documents.
- For dematerialized shares, a Transmission Request Form (TRF) is submitted to the DP for transferring shares.
FAQs
What is Share Transfer?
The process of transferring ownership of company shares involves moving the shares from one individual (the transferor) to another (the transferee). This applies to both physical and dematerialized (demat) shares.
What are the Types of Share Transfer?
- Physical Share Transfer: Involves the transfer of paper-based share certificates.
- Dematerialized Share Transfer: Involves the transfer of shares held in electronic form through a Demat account.
How to Transfer Shares in Physical Form?
To transfer shares in physical form, the transferor must fill out Form SH-4 (Share Transfer Form), attach the original share certificate, pay stamp duty, and submit the documents to the company.
What Documents Are Required for Share Transfer?
- Physical Shares: Share transfer form (SH-4), share certificate(s), proof of identity, stamp duty, and possibly Board approval.
- Demat Shares: Delivery Instruction Slip (DIS), PAN cards, proof of identity, and demat account details.
What is the Stamp Duty on Share Transfer?
The stamp duty on the transfer of shares is 0.25% of either the market value or the face value of the shares, whichever is higher.
Can Shares Be Transferred Without the Company’s Consent?
In private companies, the transfer of shares may be restricted by the company’s Articles of Association (AoA), including provisions like pre-emption rights or Board approval. In public companies, these transfers are typically unrestricted.
What Happens if the Shareholder Dies?
If a shareholder dies, the shares are transferred to the legal heirs or nominee, upon submission of a death certificate, and possibly a succession certificate or Will.
Is There Any Tax on Share Transfer?
Capital Gains Tax applies on profits made from transferring shares. The rate depends on whether the shares are held for the short term or long term.
How Long Does the Share Transfer Process Take?
In physical shares, the process usually takes around 2-4 weeks from submission of documents to issuance of new share certificates. For dematerialized shares, the transfer is typically completed within 2-3 working days after submission.
Can Shares Be Transferred Without a Formal Agreement?
A formal agreement, using the designated transfer form, is necessary for the legal transfer of shares, even if there is a verbal agreement between the parties.
Is the Transfer of Shares Permitted in Listed Companies?
Yes, shares in listed companies can be freely transferred on the stock exchange platform or through demat accounts, subject to regulations by SEBI and the stock exchange.
What is the Role of the Board of Directors in Share Transfer?
The Board may need to approve the share transfer, especially in private companies or if there are restrictions in the Articles of Association (AoA). For listed companies, the transfer usually happens through the stock exchange without Board approval.
Can I Transfer Shares if They Are Pledged?
If shares are pledged, the pledgee (lender) must release the pledge before the transfer can take place. The transferor must also notify the company about the pledge.