Transfer and transmission of shares

Transfer of shares

The shares held by members are movable property and can be transferred from one person to another in the manner provided by articles of association.

Procedure for transfer of shares: transfer of securities or interest of a member, in respect of physical shares only, shall not be registered except on production of instrument of transfer in a prescribed form, duly stamped, dated and executed and has been delivered to the company by transfer or the transferee within a period of sixty days from the date of execution along with the certificate of securities.

Transfer of partly- paid shares lodged by the transferor- Where company has partly paid up shares and instrument of transfer of shares from transferor, the company has to give a registered post to the transferee.

Delivery of security certificate- 

Every company has to deliver security certificates  within a period of time, whether such securities have been allotted, transferred or transmitted in the following cases- 

A. In case of subscribers to memorandum, within a period of two months from the date of incorporation

B. In case of shares, within a period of two months from that date of allotment.

C. In case of transfer or transmission of securities, within a period of one month.

D. In case of debentures, within a period of six months from the date of allotment.

Transmission of shares

When a registered shareholder dies or becomes lunatic or is insolvent or if company goes into liquidation, transmission of shares takes place.

In case shareholder dies or becomes lunatic, his shares are transmitted to his representatives. His representatives can sell the shares even without being registered. He is also entitled to have his name on the register of members. 

In case shareholder becomes insolvent, his shares are transmitted to Official Assignee or Receiver. He may get himself registered as holder of these shares or dispose them off.  He can even disclaim partly- paid shares or fully- paid shares that are subject to mortgage or other encumbrances.

Procedure for transmission of shares- 

Articles of Association of a company contains the procedure of transmission of shares.

Following are some documents that are required for transmission of shares-

A. Application for transmission of shares.

B. A probate or letter of administration

C. Letter of indemnity

D. No- objection certificate ( NOC) where there are more than one claimants.

Transfer and Transmission : Distinction

A. Transfer of shares is a voluntary act of a member. 

    Transmission of shares is by operation of law.

B. For transfer of shares there is always a consideration attached.

    For transmission of shares, no consideration is attached.

C. Transfer of shares can be done when a member intends to do so.

    Transmission of shares takes place only on death, lunacy or insolvency of the member.