Shareholders are real owners of the Company. They have limited liability towards the company. They have powers to appoint directors who manage the company affairs in routine. Transfer of shares has the effect of a change in ownership. Share transfer in a private limited company is usually restricted. Shares have to first be offered to existing shareholders for sale.
Share transfer can be effected subject to a relevant provision in the Articles of Association of a Private Limited Company. Therefore, it is important to review the Articles of Association of the Company prior to effecting a share transfer.
Process of Registration
1. Obtain share transfer deed in the prescribed format.
2. Execute the share transfer deed duly signed by the Transferor and Transferee.
3. Stamp the share transfer deed as per the Indian Stamp Act and Stamp Duty Notification in force in the State.
4. Have a witness sign the share transfer deed with his/her signature, name and address.
5. Attach the share certificate or allotment letter with the transfer deed and deliver the same to the Company.
6. The company must process the documents and if approved, issue new share certificate in the name of the transferee.