Share Transfer

In India, the ownership of a Private Limited Company is determined by the shareholding of the Company. The shares of the Company are transferred in order to admit new investors or to transfer the ownership of the Company.

The various circumstances under which the shares in a company may be transferred are as follows :

• Sale of shares,
• Transmission of shares by operation of law (i.e upon the death or bankruptcy of a shareholder),
• Gift of shares
• Enforcement of a charge over shares.

However, It is most common for shares to be transferred by a sale.

The shares or debentures are ‘movable property’ and are transferable in accordance with the Articles of Association of the Company. Hence, the Articles of Association of the Company must be reviewed prior to beginning the share transfer procedure. In order to transfer shares between two or more persons they must enter into a contract or arrangement. Majority of the sections of the Companies Act deal with Transfer and Transmission of Shares.