Share Transfer in a Company
Complete share transfer assistance — Share Transfer Form SH-4, stamp duty on transfer, board approval, register of members update, SEBI LODR for listed companies. Seamless transfer for private and public companies.
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What is Share Transfer?
Share transfer is the process by which a shareholder (transferor) voluntarily passes their shares to another person (transferee) in consideration of a payment or otherwise. In a Private Limited Company, share transfer is restricted by the Articles of Association — the Board of Directors has the right to refuse transfer. In a Public Limited Company and listed company, shares are freely transferable. The instrument of transfer is Form SH-4 (Share Transfer Deed) under the Companies Act, 2013. The stamp duty at 0.25% of the consideration or market value (whichever is higher) must be paid on the SH-4 as per the Indian Stamp Act. The Board must approve the transfer within 30 days of receiving the application. On approval, the Register of Members must be updated. For listed companies, transfers in demat form are processed electronically through the depository, and SEBI LODR Regulations mandate specific timelines and disclosures.
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Key Aspects of Share Transfer
Share Transfer Deed — SH-4
The instrument of transfer (Form SH-4) must be properly stamped, signed by both transferor and transferee, and submitted to the company within 60 days of execution.
Stamp Duty on Transfer
Stamp duty at 0.25% of the consideration or market value (whichever is higher) must be paid. E-stamping is accepted in most states.
Board Approval
For private companies, Board approval within 30 days of receiving the transfer application is required. Board has discretion to refuse transfer per AOA provisions.
Register of Members Update
After board approval, update the Register of Members to reflect the new shareholder. Issue share certificate to transferee within 1 month of lodgment.
Eligibility & Requirements
How to Transfer Shares in a Company
Share transfer must be executed, stamped, and board-approved in sequence. Our team handles documentation and all compliance requirements.
1Step 1: Execute Share Transfer Deed
Both transferor and transferee sign Form SH-4. The deed must specify the number, class, folio number of shares, and consideration paid.
2Step 2: Pay Stamp Duty & Submit to Company
Pay stamp duty at 0.25% of consideration. Submit the stamped SH-4 along with original share certificates to the company within 60 days of execution.
3Step 3: Board Meeting for Approval
Hold Board Meeting to approve the transfer. The board can refuse only on valid grounds mentioned in the AOA. Approval must be communicated within 30 days.
4Step 4: Update Register & Issue Certificate
Update the Register of Members with the new owner details. Issue new share certificate to the transferee within 1 month of registration of transfer.
For significant transfers, we also assist with valuation (CA/merchant banker), FEMA compliance for NRI/foreign transferees, and capital gains tax planning.
Documents Required
Transfer Documents
- Form SH-4 (Share Transfer Deed)
- Original share certificates
- Stamp duty payment proof
Identity Documents
- PAN of transferor and transferee
- Aadhaar / passport of transferee
- Address proof of transferee
Company Documents
- Board Resolution approving transfer
- Updated Register of Members
- New share certificate for transferee
Post-Registration Compliance
Right of Pre-emption (AOA)
Many private company AOAs include right of pre-emption — existing shareholders must first be offered shares before transfer to outsiders. Verify AOA before any transfer.
Capital Gains Tax
Transfer of shares is a taxable event. Short-term capital gains (held less than 24 months for unlisted shares) are taxed at slab rates. Long-term at 20% with indexation for unlisted shares.
FEMA Compliance for NRI/Foreign Buyers
Transfer of shares to or from NRIs or foreign nationals requires RBI approval in certain cases under FEMA. A CA certificate for fair valuation is mandatory.
Demat Transfer for Listed Companies
For listed companies, share transfers happen electronically through NSDL/CDSL. SEBI LODR mandates that all transfers be in demat form. SH-4 is not used for demat transfers.
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