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Share Transfer
Shareholders are real owners of the Company. They have limited liability towards the company. They have powers to appoint directors who manage the company affairs in routine. Transfer of shares has the effect of a change in ownership. Share transfer in a private limited company is usually restricted. Shares have to first be offered to existing shareholders for sale.
Share transfer can be effected subject to a relevant provision in the Articles of Association of a Private Limited Company. Therefore, it is important to review the Articles of Association of the Company prior to effecting a share transfer.
Meaning of Share Transfer
Transfer of shares means the voluntary handing over of the rights and possibly, the duties of a company member (as represented in a share of the company). The rights and duties of the share transfer happen from a shareholder who wishes to not be a member of the company any more to a person who wishes of becoming a member.
Thus, shares in a company are transferable like any other movable property in the absence of any expressed restrictions under the articles of the company.
Persons involved in Share Transfer
- Subscribers to the memorandum.
- Legal Representative, in case of a deceased.
- Transferor.
- Transferee.
- Company (whether listed/ unlisted).
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