FAQ

ON TRANSFER OF SHARES

1. What is a share transfer?

A share transfer is the process by which an existing shareholder sells (or gives) one or more of their existing shares to a new owner.

2.What is the procedure for share transfers?

The current owner fills and signs a share transfer form and passes it, together with any share certificate, to the proposed new owner, in return for payment of the purchase price for the shares.

3.Is any stamp duty need to pay on share transfer?

Yes, Stamp duty is levied at the rate of 0.25% of consideration i.e. the amount to be paid is 25 paisa for a share transfer of Rs. 100.

4.Who is liable to pay stamp duty on share transfer?

The proposed new owner is normally liable for stamp duty on the transfer.

5.Are shareholders free to transfer or sell their shares to someone else?

Yes, but subject to the provisions of Article of Association of Company.

6.How is a fair value established for share transfers?

Shares can be freely sold, seller and buyer can negotiate a price between them. However, the company's articles of association, or a shareholders agreement if any, may specify how the shares are to be valued.

7.Can shareholder transfer or sell his shares to any foreigner?

Yes, but subject to the provisions of the Foreign Exchange Management Act, 1999 and rules and regulations made thereunder.

8.What is the compulsorily instrument for transfer of shares?

Share transfer deed in Form SH.4 duly stamped and executed by or on behalf of the seller and buyer.

9.What is the time period for depositing instrument of transfer?

An instrument of transfer of shares i.e. Form SH.4 shall be delivered to the company within sixty (60) days from the date of such execution.

10.What is time period for issue of share certificates on transfer?

Every company shall, within One month deliver, the certificates of all shares transferred after the application for the registration of the transfer of any such shares.