Share Transfer in Private Company with Delfyle
Transferring shares in a Private Limited Company is a legally structured process. We ensure your share transfer is smooth and compliant, handling all documentation and legal formalities with precision.
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Share Transfer in a Private Limited Company – Process, Rules & Expert Help from Delfyle
Transferring shares in a Private Limited Company is a structured process that facilitates the movement of ownership from one party to another. Since shares represent equity ownership in a company, their transfer is a significant legal and financial transaction governed by the Companies Act, 2013 and regulations by the Ministry of Corporate Affairs (MCA).
At Delfyle, we simplify the share transfer process with expert legal and compliance support, ensuring a seamless, legally compliant transfer of ownership in private companies.
What is Share Transfer?
Share transfer is the voluntary transfer of ownership rights by a shareholder to another individual or entity. This transfer includes rights to profits, voting power, and liabilities associated with the shares.
Like any other movable asset, shares can be sold or transferred unless restricted by the company’s Articles of Association (AOA).
Legal Framework for Share Transfer in Private Limited Companies
Share transfers in private companies are strictly governed under:
- ✔ 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 are designed to protect stakeholder interests and maintain the “private” character of the company.
Share Transfer Rules in a Private Limited Company
Private Limited Companies often include restrictions on share transfers in their AOA to maintain control and ensure internal regulation. Key restrictions include:
- ✔ Pre-Emptive Rights: Existing shareholders have the right of first refusal.
- ✔ Board Approval: Directors may reserve the right to refuse a share transfer.
Delfyle simplifies the complex procedure of share transfer, providing expert guidance to ensure legal compliance and accurate documentation.
"Ensure a smooth and legally compliant transfer of ownership with our expert share transfer services."
Team Delfyle
Key Participants in the Share Transfer Process
- ✔ Transferor: The existing shareholder selling or transferring shares.
- ✔ Transferee: The individual/entity acquiring the shares.
- ✔ Company: Must facilitate and record the transfer in its share register.
- ✔ Legal Representative: Required in case of the shareholder's death.
Share Transfer: Required Documents & Step-by-Step Procedure
Documents Required for Share Transfer
To ensure a valid and legally enforceable share transfer, the following documents must be submitted:
- Form SH-4 (Share Transfer Deed): Duly signed by transferor and transferee.
- Original Share Certificate: The certificate of the shares being transferred.
- PAN Card Copy: Of the transferee for identity verification.
- Board Resolution: Document approving the share transfer.
- Indemnity Bond: If applicable, to protect the company from any liabilities.
- Stamp Duty Payment: Based on share value and applicable state rules.
Step-by-Step Procedure for Share Transfer
Step 1: Review the AOA
Review the Articles of Association for any restrictions on share transfers.
Step 2: Company Notification
The transferor must notify the Board of Directors with details of the proposed transfer.
Step 3: Execute Form SH-4
Fill and sign Form SH-4, which should be duly stamped and witnessed.
Step 4: Company Approval
The company approves the transfer and issues a new share certificate to the transferee within one month.
Compliance & Penalties for Non-Compliance
Compliance Post Share Transfer:
- Register of Members and Share Certificates must be updated.
- Changes in ownership must be reflected in annual filings.
Penalties for Non-Compliance:
Failing to follow the correct procedure can lead to penalties of ₹10,000 for initial default and ₹1,000 per day for continuing violations.
Why Choose Delfyle for Share Transfer Services?
Expert Share Transfer Assistance
Delfyle offers end-to-end support to make the share transfer process smooth, secure, and fully compliant with Indian company law.
Seamless Ownership Transfer
Simplify Your Share Transfer Process
From AOA review to legal documentation and company filings, our experts provide end-to-end support to ensure a hassle-free and legally sound share transfer.
Legal Compliance
We ensure all share transfers adhere to the Companies Act, 2013 and your company's Articles of Association.
Paperwork & Filings
Our team manages the drafting of Form SH-4 and handles all necessary filings to the Registrar of Companies.
Timely Execution
We streamline the process to ensure new share certificates are issued promptly and records are updated on time.
For instant assistance, Call us at +91 74395 87419