TRANSFER OF SHARE

Introduction:                           One of the important features of the company is that its shares/securities are transferable.  Transfer of security is a voluntary and deliberate act of the transferor as well as transferee whereas transmission is a result of operation of law.  The transfer or transmission of securities must be in accordance with the provision of this Act. 

The definition of securities is given under Section 2 (81) of Companies Act which provides Securities means the securities as defined in clause (h) of Section 2 of The Securities Contracts (Regulation) Act, 1956.

As per Section 2(h) (i) of The Securities Contracts (Regulation) Act, 1956 Securities includes shares, scrip, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or any of incorporated company or other body corporate.

Meaning and need:                The share transfer registration arises when some of the existing Members wish to dispose of part or full of their existing holdings or new persons desire to invest their savings.

Method:                                  Transfer is a normal method of transferring property in shares.

Action:                                    Transfer of share is a voluntary and deliberate act of the transferor as well as transferee.

Consideration:                        There must be adequate consideration for the transfer of shares unless shares are transferred by way of gift.

Authorized person:                 Transfer of share is effected by the shareholder i.e. transferor or by a person authorized by the shareholder.

Stamp duty:                            Transfer is an act of owner for valid consideration requiring stamp duty which is payable on the market value of shares.

Conclusion:                             The share of public company are transferable whereas there are restrictions on transfer of shares of private company.  The Companies Act has laid down an elaborate procedure for transfer of share.