Recap

Reduction of capital
Reduction of capital and objecting creditors.
Liabilities of members in respect of reduced
shares.
Prohibition on purchase of shares and its
exception.
Purchase of its own shares by listed companies.

Transfer and Transmission of Shares

Concept of Transfer
/Transmission of Shares &
Debentures:
The word transfer is
an act of the parties by which title to property is
transferred from one person to another. (Person also includes legal person
e.g. company, body corporate, etc.)
The word transmission is referred to transfer of title to parties by
operation of law.
Transfer of shares means a voluntary passing of property in certain shares
from one person to another by presenting to the company a duly stamped
and executed instrument of transfer, by or on behalf of the transferor and
transferee containing their names, addresses and occupations along with
the share certificates relating to the shares to be transferred,
whereas transmission on the other hand, involves the passing of the
property in shares by operation of law on the happening of such events such
as death, insolvency or lunacy of a share-holder/debenture-holder, etc

Concept of Transfer
/Transmission of Shares &
Debentures:
share
transfer is a procedure by which

A
an
existing shareholders transfers his/her share(s)
or/and debenture(s) to an existing shareholder(s),
or to any one else depending upon the transaction
and circumstances of the case. Under the law
anyone has a right to transfer his / her share(s) to
any existing one or anyone else;
however a private company may by its articles of
association (AOA) restrict the right to transfer the
companys shares .

Provisions of Law Relating To

Transfer & Transmission of
Shares or/and Debentures:
Sections 74 to 81 of the Ordinance
deal with issues governing the
transfer and transmission of shares
or / and debentures.

Limitation on Transfer of Shares

and Debentures
Every company has to transfer the shares within forty five days of
application. The company shall within 30 days or where the
transferee is a central depositary company within five days from
the date on which the instrument of transfer is lodged with the
company, will notify the defect or invalidity to the transferee who
shall after removing the identified defect shall re-lodge the
transfer deed with the company.
These conditions, in relation to a private limited company shall be
subject to such limitations and restrictions as imposed by its AOA,
if any. The company shall not register transfer of shares unless
proper instrument of transfer, duly stamped and executed by the
transferor and the transferee has been delivered to the company.

Stepwise Procedure for Transfer

of Shares:
Following procedure shall be adopted for transfer of
shares:
Lodgment of Transfer Deed:

An application for transfer of shares along with duly filled in

transfer deed and share certificate in original is lodged at
registered office of the company or the share registrar office by
the transferee, or the transferor. Normally, a receipt is issued.

Note:- In case transfer deed or share certificate is lost,

necessary affidavit and any other evidence supporting the
fact is provided to the company.

Stepwise Procedure for Transfer

of Shares:
Checking and Verification:

The company checks and verifies the transfer deed and share
certificate. The company is required to register a transfer of
shares only in case proper instrument of transfer duly
stamped in accordance with the Stamp Act, witnessed, executed
by the transferor and the transferee and is delivered along with
the certificate(s).

Notice:
In case the articles of the company provided any other condition
or there are any shortcomings/deficiencies as provided in the
law and AOA of the company, the company issues a notice to
the presenter regarding such transfer for further verification.

Stepwise Procedure for Transfer

of Shares:
Approval:

Approval for transfer of shares is sought from

the board of directors or committee of
directors as the case may be.

Register of members:
Necessary entries are made for entering the
name of transferor in the register and
recording transfer against the name of
transferor.

Stepwise Procedure for Transfer

of Shares:
Share Certificate:

Entry is made in the Memorandum of Transfer

column on the reverse of the share certificate
thereby making the transferee as shareholder.

Delivery of Share Certificate:

Share certificate is sent to the transferee
through registered post or well reputed courier
service and acknowledgement of receipt is kept
on record.

Stepwise Procedure for

Transmission of Shares:

Following procedure shall be adopted for transmission of

shares:
Intimation:
As soon as intimation of death, lunacy, insolvency of a
member or any direction/order of the court is received, the
fact is required to be recorded in the relevant register of the
company.

Death Certificate:
In case of death, the legal heir(s) is required to produce
death certificate issued by relevant authorities.

Stepwise Procedure for

Transmission of Shares:

Application for transmission of shares:

The legal heir(s) or successors are required to make
application to the company for transmission of
shares duly supported with the documentary
evidence showing nomination or lawful award of
applied property to him.

Approval:
Approval for transmission of shares is sought from
the board of directors or committee of directors as
the case may be.

Stepwise Procedure for

Transmission of Shares:

Register of Members:

Necessary entries are made for entering the name of

successors in the register and recording transfer against
the name of deceased.

Share Certificate:
Entry is made in the Memorandum of Transfer column on
the reverse of the share certificate thereby making the
successor as shareholder.

Delivery of Share Certificate:

Share Certificate is sent to the successor and
acknowledgement of receipt is kept on record.

Stepwise Procedure for

Transmission of Shares:

Register of Members:

Necessary entries are made for entering the name of

successors in the register and recording transfer against
the name of deceased.

Share Certificate:
Entry is made in the Memorandum of Transfer column on
the reverse of the share certificate thereby making the
successor as shareholder.

Delivery of Share Certificate:

Share Certificate is sent to the successor and
acknowledgement of receipt is kept on record.

Provisions Regarding Transfer of Shares

(Section-76)
The mode of transferring shares provided by articles.

An application for the registration of transfer of shares made by

transferor or transferee.

Proper instrument of transfer is used.

In case of lost of transfer deed the director may register the transfer
with indemnity as they think fit.

 Shareholder has right to transfer shares unless the article

provides otherwise.
In the absence of any restriction in the article, the company
has no inherent power to refuse bona-fide transfer of share in
the company.
Share certificates should be ready for delivery within 45 days.

Refusal To Transfer (Section-77&78)

The director can not refuse to transfer the shares unless
the transfer deed is invalid.
If directors refuse registration, they must notify this fact
to the applicant within thirty days or where the transferee
is a central depository, within five days from the date on
which the instrument of transfer was lodges with
company.

 In case of private company, if any restriction is imposed

on transfer of share by the article then the transfer of
shares shall be subject to those restriction .
In case of default, company and officers shall be liable to
a fine not exceeding twenty thousand and further fine not
exceeding one thousand for everyday for which default
continues.

Appeal Against Refusal For Registration of Transfer

(Section-78A)

A person may appeal to the commission against any

refusal to register transfer.
Appeal shall be made within two months of the receipt
of the notice of refusal or expiry of thirty days period
for registration.

 The commission may direct that the transfer and

transmission shall be register by the company or it need not
be registered. The company shall give effect to the decision
within fifteen days of receipt of order.
In case of default, every director or officer of the company
shall be punishable with fine which may extend to five
hundred for every day during which default continues.

Transfer of shares to
Successor in interest (Section79)
The transfer of shares from a deceased member to his
lawful nominee or successor in interest shall be
made on application by such nominee or successor
dully supported by a document evidencing
nomination or lawful award of the relevant property
to such nominee or successor and the nominee or
successor shall be entered as member.

Transfer to Nominee of a Deceased Member

(Section-80)
Deposit nomination
A person may on acquiring interest in a company as member at
any time after acquisition of such interest deposit with the company
a nomination conferring on one or more persons the right to acquire
the interest in the shares specified in the event of death.
Specify the extent of right
where the member nominates more than one person, he shall
specify in the nomination the extent of right to conferred upon each
of nominee.

Nominee excludes all others

Where any nomination, duly made and deposited with the
company to confer upon any person the right to receive the
whole or any divisible part of interest, the said person shall, on
the death of member, become entitled to the exclusion of all
other persons, to become the holder of shares.
And on receipt of proof of the death of the member, the
transmission of the said shares shall be registered in favour of
the nominee to the extent of his interests unless

Nominee excludes all others

1. Such nomination is at any time varied by another
nomination made and deposited before the death of the
member in like manner or expressly cancelled by notice in
writing to the company
2. such nomination at any time become invalid by reason of
the happening of some contingency specified therein.
If the said person predeceases the member, the nomination shall
become void and of no effect.

The Title of Deceased Shareholder is

Transferred to:
The title of share of deceased shareholder is transferred to:
His lawful successor on application made by successor.
Nominee of deceased member on receipt of proof of death of
the member with share certificate. Only the spouse, father,
mother, brother, sister and son or daughter( real, step or
adopted) can be nominated.

Transfer of the Share by Nominee or Legal

Representative (Section-81)

Transfer of the share by nominee or legal representative

shall be valid if he had been a member at the time of
execution of the instrument of transfer.

Transmission of Shares
Transmission is the passing of title or property in shares
by operation of law on the happening of such events as
death, insolvency or lunacy of shareholder.

Differences Between Transfer and

Transmission of Shares
Transfer

Transmission

Passing of title or property and

deliberate act of the shareholder.

Passing of title or property in shares by

operation of law on the happening of
certain events.

Takes place when a member transfer

his shares to some other person on
sale, gift, during his life time.

Takes place on the death, insolvency or

lunacy of a shareholder.

In case of transfer the title to holding

and the right to transfer passes to
transferee.

The title to shares and the right to transfer

them passes to the executors or
administrators of deceased to official
assignees of an insolvent or to guardian of
a lunatic.

A duly stamped and properly executed

instrument of transfer has to be
lodged with company for registration.

No instrument of transfer is needed. Only

probate, letter of both administration and
succession certificate or court order is to
be produced by legal representatives.

Upcoming
Borrowing powers of company
Short Terms
Running Finance/Bank Overdraft/Cash Credit
Discounting Commercial papers
Public Deposits
Long Term and Medium Term
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