Share Transfer.

📑 Private Limited Company Share Transfer in India

Transfer Shares Easily with India Fills’ Expert Support

🔍 What is Share Transfer in a Private Limited Company?

In a Private Limited Company, share transfer refers to the voluntary movement of ownership from one individual (transferor) to another (transferee). Since shares represent a unit of ownership in the company, transferring them signifies a change in membership.

🧾 In India, the process is regulated under the Companies Act, 2013 and is subject to the provisions outlined in the Articles of Association (AOA) and the rules prescribed by the Ministry of Corporate Affairs (MCA).

🛡️ Legal Framework Governing Share Transfers

The transfer of shares in a Private Company is governed by:

• 📘 Section 56(1) & (3) of the Companies Act, 2013
• 🧾 Rule 11(1), (2), (3) of the Companies (Share Capital and Debentures) Rules, 2014

These laws ensure that share transfers are handled transparently and comply with the company’s internal regulations.

📌 Important Provisions in AOA for Share Transfer

Before initiating the transfer, the Articles of Association (AOA) must be reviewed, as they define how shares can be sold or transferred.

🔁 Key AOA Restrictions:

• Pre-emptive Rights: Shares must first be offered to existing shareholders. If no one is interested, the shares may be offered to an outsider.
• Board’s Discretion: Directors may have the authority to approve or reject a transfer request, safeguarding the private nature of the company.

👥 Who are Involved in the Share Transfer Process?

The process of transferring shares involves the following key parties:

• 🧾 Transferor – Existing shareholder selling the shares
• 🧾 Transferee – New shareholder purchasing the shares
• 🧾 Company – Which facilitates the share transfer
• 🧾 Legal Representative – In case of transfer due to death of a shareholder
• 🧾 Initial Subscribers – To the company’s Memorandum

📄 Documents Required for Share Transfer

To successfully transfer shares in a Private Limited Company, the following documents are needed:

• 📝 Form SH-4 (Share Transfer Deed) – Signed by both transferor and transferee
• 📜 Original Share Certificate – Issued by the company
• 🧾 PAN Card Copy – Of the transferee
• 🗂️ Board Resolution – Approving the share transfer
• ✅ No Objection Certificate (NOC) – From the seller, if required
• 🛡️ Indemnity Bond – To protect the company against future disputes
• 💸 Stamp Duty Payment – As per the Indian Stamp Act (varies by state)

🛠️ Step-by-Step Share Transfer Procedure

1️⃣ Review Articles of Association (AOA)

Check for any restrictions or special provisions related to share transfers.

2️⃣ Notify the Company

The transferor must notify the company of their intent to transfer shares.

3️⃣ Price Valuation

Determine the fair value of shares as per the AOA. Valuation is generally done by directors or a registered valuer/auditor.

4️⃣ Offer to Existing Shareholders

Existing shareholders are given the first right to purchase the shares at the determined price.

5️⃣ External Offer (if applicable)

If existing shareholders decline, the shares may be offered to external parties.

🖊️ Executing the Share Transfer

Once a transferee is finalized, follow these steps to legally execute the transfer:

• ✅ Obtain and fill Form SH-4 (Share Transfer Deed)
• 🖋️ Signatures – Both the transferor and transferee must sign the deed
• 💰 Pay Stamp Duty – As applicable under the Indian Stamp Act
• 🧾 Witness Verification – A witness must sign, providing their full name and address
• 📩 Submit Documents – Including the deed and share certificate to the company
• 📜 Issue of New Share Certificate – The company will issue a new certificate recognizing the transferee as the shareholder

⚠️ Exemptions from SH-4 Requirement

In certain cases, Form SH-4 may not be required. These include:

• Transfers by directors or nominees of a body corporate under Section 187
• Transfers involving government-controlled companies
• Pledged shares as collateral for loans from banks or financial institutions
• Debenture transfers using other accepted forms

🤝 Why Choose India Fills for Share Transfer Services?

India Fills offers expert assistance for hassle-free share transfers in Private Limited Companies. Here’s how we help:

• 🔍 In-depth review of your AOA and legal documents
• ✍️ Proper drafting of Form SH-4 and other deeds
• 💼 Professional assistance in board resolutions and NOC preparation
• ✅ Timely and accurate compliance with MCA rules

📞 Get Expert Help with Share Transfers Today!

Ready to transfer shares in your Private Limited Company?
Contact India Fills now and let our experts take care of the entire process—legally, quickly, and professionally.