Transfer of Shares in Private Limited Company

September 18, 2019

Transfer of Shares in Private Limited Company is not freely transferable but there are restrictions on transfer, shares of Private Limited Company can be transferred in accordance with the provisions of Companies Act, 2013

Shares are transferred by the person is the shareholder of the Company to another person but he must give a letter to Private Limited Company of which he wishes to transfer shares mentioning that He wants to transfer a certain number of shares of the company as the shareholders of Private Limited company cannot freely transfer shares to anyone. The Company will intimate the same to all the existing shareholders of the company. Once the No Objection Letter or Consent to purchase is received the share transfer deed in form SH-4 is to be executed between Transferor and  Transferee and the consideration for the transfer of shares to be paid by the transferee to the transferor.

The Executed SH-4 along with Original Share Certificate and Copy of Identity Proof (PAN) is sent to Company for Registration of Transfer of Shares by Company and Company shall make  approve the transfer of shares if all the formalities regarding share transfer are complete in all respect and after which company will make necessary entries in the register of members of the company.

Stamp Duty on Transfer of Shares: The Share Transfer Stamps are to affixed of the value of 0.25%  for consideration of transfer on  SH-4 (Instrument of Transfer ) and are required to be crossed.

Let us understand with an Example:  If you want to Transfer shares of Rs. 2 Lakhs for total consideration than you have affix share Transfer of Rs. 200000*0.25% = Rs. 500

Stamp Duty on Shares held in Demat Form: No Stamp is required to paid if Shares of Private Company are held in Demat Form.

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