The ownership of a Private Limited Company in India is decided by the shareholding of the Company. For inducting new investors or transferring the ownership of the company the shares of the company need to be transferred. The company’s interest could be sold to attract new investors or to pass control of the company.
An important characteristic of the company is that the shares can be transferred. The shares or the debentures are movable property, they are transferable as they are provided by the articles of the company, especially the shares of any members of a public company.
The share transfer is possible only through a contract or arrangement between two or more persons. The provisions of the Companies Act majorly deal with the transfer and transmission of securities. The transmission of the securities due to death, succession, inheritance, bankruptcy, etc. The transfer of securities is possible through any contract or arrangement between two or more persons. The provisions of the Companies Act deal with the transfer and transmission of securities.
Transmissions of the securities mean the loss of titles on these securities due to death, succession, inheritance, bankruptcy, etc.
Transfer of shares means handing the rights and possibly the duties of a company member voluntarily. The rights and the duties of the share transfer happen from the shareholder who is wishing to not be a member of the company anymore to a person who is willing to be a member of the company.
Thus the shares in a company are transferable like any other movable property in the absence of the expressed restrictions under the Articles of the Company.
There are certain restrictions over the transfer of the shares of the Private Limited company the following procedure should be followed to transfer the shares:
Then the transferor will transfer the shares by the following process:
Form SH-4: This is the most important instrument of transfer through which the process is initiated. The transferor will have to submit the SH4 that is duly executed, dated, and stamped to the company. The SH4 contains the following information:
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