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The procedure of Share Transfer in Private Limited Company

To initiate the share transfer procedure, the following steps must be followed :

  • Step 1: The Articles of Association of the Private Limited Company must be reviewed and restrictions, if any must be addressed to.
  • Step 2: Shareholder must give notice in writing to the Director of the Company about his intention to transfer share of the company.
  • Step 3: Determine the price as per Articles of Association at which the shares of the Company will first be offered to present shareholders of the Company. (The Company Directors or the Company Auditor usually decides this price.)
  • Step 4: The Company must then give notice to the other shareholders about the availability of share, the last date to purchase the shares and the price at which the share are available.
  • Step 5: Filling and signing of the Share Transfer Deed in Form SH-4.
  • Step 6: The transfer certificate shall be stamped in accordance with the Indian Stamp Act and the Stamp Duty Notification in force in the state in question. For every 100 rupees of share value or part thereof, the official share transfer rate is 25 paisa. Check that the stamp affixed on the transfer deed is cancelled at the time of or before the signing of the transfer deed.
  • Step 7: The signatures of the transferor and the transferor of a share transfer deed must be witnessed by a person who shall mention his name, address and signature on the same.
  • Step 8: Attach the share certificate or allocation letter with the share transfer deed and deliver the same to the company. Within sixty (60) days from the date of execution the share transfer deed must be deposited to the Company by or on behalf of the transferor and by or on behalf of the transferee.
  • Step 9: The Board of Directors of the company must review the documents and if approved by passing a resolution, register such transfer and issue new share certificate in the name of the transferee.

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