Transferability of shares in private limited companies make convenient for shareholders to change their stake amongst the members. Therefore, private limited companies are preferred by entrepreneurs over the other business model.
Transfers of shares in case of private Limited companies are governed by the provision of Companies Act, 2013. Therefore, if you want to transfer shares which hold in private limited companies, then you have to go through the following steps:
- Proper instrument of transfer i.e. Form SH. 4, duly stamp, dated and have to be executed by both transferor and transferee.
- Form SH. 4 to be sent to the Company within 60 days from the date of execution.
- Share certificate has to be sent along with Form Sh. 4
- Transfer of Share in case of Death of shareholder:
This case comes under transmission of shares and conditions cited above shall not be applicable and it is done by virtue of normal operation laws.
- Transfer of Shares in case of partly paid up shares:
A company shall not register a transfer of partly paid shares, unless the company has given a notice in Form No. SH.5 to the transferee and the transferee has given no objection to the transfer within two weeks from the date of receipt of notice.
What happen if company refuses to register transfer of shares?
If a private company limited by shares refuses to register the transfer of, or the transmission of the right to, shares. Then company shall within a period of thirty days from the date on which the instrument of transfer, or the intimation of such transmission, as the case may be, send notice of the refusal to the transferor and the transferee giving reasons for such refusal.
The transferee may appeal to the Tribunal against the refusal within a period of thirty days from the date of receipt of the notice or in case no notice has been sent by the company, within a period of sixty days from the date on which the instrument of transfer or the intimation of transmission.