Answer By law4u team
Shares in a private company can be transferred by following the procedure prescribed under the Companies Act, 2013 and the Articles of Association of the company. In a private company, share transfer is usually restricted, so the rules mentioned in the Articles must be checked first before initiating the transfer. The general process begins with the shareholder who wants to transfer shares filling and signing a share transfer deed in the prescribed form. The transferee, meaning the person receiving the shares, must also sign the document. Proper stamp duty must be paid on the transfer deed according to applicable state stamp laws. After execution of the transfer deed, the original share certificate is attached and submitted to the company. The company’s Board of Directors will review the request. In many private companies, existing shareholders may have a right of first refusal, meaning shares must first be offered to them before transferring to an outsider. If the Board approves the transfer, the company records the change in the register of members and issues a new share certificate in the name of the transferee within the prescribed time limit. Once this process is completed, the transferee becomes the legal shareholder of the company. If the company refuses to register the transfer, it must provide valid reasons, and the aggrieved party may seek legal remedy.
