Share Transfer & Transmission in India (Companies Act, 2013)

The process of transferring or transmitting shares in a company is governed by the Companies Act, 2013 and Companies (Share Capital and Debentures) Rules, 2014.

1. Difference Between Share Transfer & Share Transmission

Feature	Share Transfer	Share Transmission
Definition	Voluntary transfer of shares by a shareholder to another person	Automatic transfer of shares due to death, insolvency, or succession
Initiated By	Shareholder (Transferor)	Legal heir, nominee, or successor
Reason	Sale, gift, or other voluntary reasons	Death, inheritance, bankruptcy, or court order
Process	Requires execution of Share Transfer Deed (Form SH-4)	No transfer deed required; based on legal proof (death certificate, succession certificate, etc.)
Stamp Duty	Yes, as per the value of shares	No stamp duty applicable
Approval	Requires Board approval	Requires Board approval

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2. Share Transfer Process (Voluntary Transfer)

Step 1: Check Articles of Association (AOA)

🔹 Some private companies have restrictions on share transfer in their AOA.
🔹 If required, get approval from existing shareholders or Board of Directors.

Step 2: Execute Share Transfer Deed (Form SH-4)

🔹 Fill Form SH-4 (Securities Transfer Form)
🔹 Sign the form by Transferor (Seller) and Transferee (Buyer)
🔹 Attach Share Certificate (or Letter of Allotment if a certificate is not issued)
🔹 Pay Stamp Duty as per market value of shares

Stamp Duty Calculation for Share Transfer:
0.25% of consideration value (or market value if not stated)

Step 3: Submit Documents to Company

🔹 Transferor submits Form SH-4 and original Share Certificate to the company within 60 days from execution.

Step 4: Board Approval & Issue of New Share Certificate

🔹 The company’s Board of Directors reviews and approves the transfer in a Board Meeting.
🔹 A new share certificate is issued to the transferee.
🔹 The company updates its Register of Members (Form MGT-1).

Key Forms & Timeline for Share Transfer

Form	Purpose	Timeline
SH-4	Share Transfer Deed	Within 60 days from execution
MGT-7	Annual Return (reflecting shareholding changes)	Annually
PAS-3 (if applicable)	Return of Allotment (if fresh shares are issued)	Within 30 days

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3. Share Transmission Process (Automatic Transfer Due to Death, Succession, etc.)

Step 1: Legal Heir/Nominee Notifies Company

🔹 The legal heir, nominee, or successor must inform the company in writing about the shareholder’s death or insolvency.

Step 2: Submit Required Documents

🔹 Death case:
✅ Death Certificate
✅ Succession Certificate (if no nominee is registered)
✅ Indemnity Bond (if required)
✅ PAN Card of nominee/heir

🔹 Bankruptcy/Insolvency case:
✅ Court Order (stating ownership transfer)
✅ PAN Card of new shareholder

Step 3: Board Approval & Share Transmission

🔹 The Board of Directors approves the transmission in a Board Meeting.
🔹 No need for SH-4 or Stamp Duty.
🔹 The company updates its Register of Members (MGT-1).

Step 4: Issue of New Share Certificate

🔹 A new share certificate is issued in the name of the legal heir or nominee.

Key Forms & Timeline for Share Transmission

Form	Purpose	Timeline
MGT-1	Register of Members Update	Immediately
MGT-7	Annual Return (reflecting shareholding changes)	Annually

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4. Sample Board Resolutions

A. Board Resolution for Share Transfer

CERTIFIED TRUE COPY OF THE RESOLUTION PASSED AT THE MEETING OF THE BOARD OF DIRECTORS
OF [Company Name] HELD ON [Date] AT [Registered Office Address]

RESOLVED THAT pursuant to Section 56 of the Companies Act, 2013, and upon review of the duly executed Share Transfer Deed (Form SH-4) submitted by [Transferor Name], the transfer of [Number] equity shares of ₹[Face Value] each, from [Transferor Name] to [Transferee Name], be and is hereby approved.

FURTHER RESOLVED THAT the Company Secretary is hereby authorized to update the Register of Members and issue a fresh share certificate in the name of [Transferee Name].

For & on behalf of
[Company Name]
[Signature]
[Director/Authorized Signatory]

B. Board Resolution for Share Transmission (Due to Death of Shareholder)

CERTIFIED TRUE COPY OF THE RESOLUTION PASSED AT THE MEETING OF THE BOARD OF DIRECTORS
OF [Company Name] HELD ON [Date] AT [Registered Office Address]

RESOLVED THAT pursuant to Section 56(2) of the Companies Act, 2013, and upon review of the Death Certificate of [Deceased Shareholder Name] and Succession Certificate provided by [Legal Heir/Nominee Name], the transmission of [Number] equity shares of ₹[Face Value] each to [Legal Heir/Nominee Name] be and is hereby approved.

FURTHER RESOLVED THAT the Company Secretary be authorized to update the Register of Members and issue a fresh share certificate in the name of [Legal Heir/Nominee Name].

For & on behalf of
[Company Name]
[Signature]
[Director/Authorized Signatory]

FAQs on Share Transfer & Transmission