TRANSFER OF SHARES
The shareholders are the owners of a company limited by shares who are vested with wide powers of controlling the Company like appointment and removal of Directors, approval for bringing additional funds and the approval of related party transactions etc.
Transfer of ownership of a company can therefore be affected by transferring the shares held by one member to another. Share transfer in a Private Limited Company is usually more restricted in compared to a Public Limited Company. In case of Private Limited Company, the shares are closely held by either a small group of persons, family members or friends, etc. Hence, most of the Articles of Association of a Private Limited Company limit the right of a shareholder to transfer the company's shares to an outsider. Therefore, it is important to check the provisions of the Articles of Association of the Company prior to affecting a share transfer to understand additional compliances, if any.
Attributes OF SHARE TRANSFER
1. Articles of Association: The Articles of Association define terms and conditions of transfer of shares. Articles of Association of a company may restrict transfer of shares in Private Limited Company.
2. Shareholders: Shareholders being persons or corporate entities are the legal owners of the shares of a company. They can also be NRIs, Foreign Nationals and Foreign Entities.
3. Directors: Usually, Directors are not owners of a company unless they hold any share in the Company like qualification shares (as was earlier). Directors of a company are appointed by the shareholders of a company to manage the affairs of a company. Directors can also be shareholders and shareholders can also be Directors.
PROCESS FOR SHARE TRANSFER
1. Share Transfer Process: LEGALRAJ will assist you in transfer of shares in about 2 Days.
2. Review: We will review present shareholding of the Company and the Articles of Association to understand terms and conditions related to transfer of shares. The review would take 3 - 5 working days.
3. Document Preparation: Then we will provide timelines, documents and do the compliances for you. Documents will be prepared in 2 working days depending on complexity.
4. Share Issue: Based on the share transfer documentation, we will execute transfer forms and do other compliances in 2 – 3 working days after reviewing the AOA and Shareholding Pattern.