Transfer of Shares: The transfer of shares involves the transfer of ownership of shares from the transferor to the transferee. Public companies generally allow for the transfer of shares unless there are valid restrictions, while private limited companies typically have restrictions on transferability, with some exceptions. A transfer deed is executed to formalize the transfer of shares.
Transmission of Shares: The transmission of shares occurs as a result of legal action, such as the death, insanity, or insolvency of the holder, or the winding up of a company holding shares. Unlike a transfer of shares, a transfer deed is not executed, and the transferee obtains rights to the shares upon providing proof of entitlement. In the event of the holder's death, the shares are transferred to the legal representative, and in the case of insolvency, they are transferred to the official assignee. The table below summarizes the differences between the transfer and transmission of shares.
Basis of Comparison | Transfer of Shares | Transmission of Shares |
Act | Transfer of Shares is a voluntary act | whereas a Transmission of Shares occurs under normal operation of law. |
Affected By | The deliberate act of parties. | Insolvency, death inheritance or lunacy of the member. |
Initiated By | Transferor and Transferee | Legal heir or receiver |
Consideration | Adequate consideration must be there. | No consideration is paid. |
Execution of valid transfer deed | Required | Not required |
Liability | Liabilities of transferor cease on the completion of the transfer | Not required |
Stamp Duty | Payable on the market value of shares | No need to pay |
A company’s share capital can also be changed by dividing the value of the shares held by its shareholders.
Registered or nominal capital is another name for authorized capital. This is the amount of money needed to start a business.
The Company can also change the capital of its shares by converting fully paid up shares into stock. The whole number of fully paid up shares is referred to as stock.
The company can also change its share capital by combining shares of lower denominations into larger denominations.
The corporation can also cancel any outstanding debt. However, this does not result in a change in share capital.
| The key participants in a share transfer are: | |||||
| Subscriber to the Memorandum: A person who has subscribed to the company's memorandum of association. | |||||
| Legal Representative: A representative appointed to handle the transfer of shares on behalf of a deceased transferor. | |||||
| Transferor: The individual or entity transferring or selling their shares. | |||||
| Transferee: The individual or entity acquiring or buying the shares. |
| The documents required to transfer shares may vary depending on the jurisdiction and the specific circumstances of the transfer. However, some common documents that may be required include: | |||||
| 1. Original share certificate(s) of transferor | |||||
| 2. Self-attested copy of PAN card of Transferor(s) (i.e. sellers) and Transferee(s) (i.e. buyers) | |||||
| 3. Pay appropriate stamp duty @0.25% on market value by way of franking or affix share transfer stamps. | |||||
| 4. Form SH-4 duly filled and signed. |
