Shares transfer

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

20 October 2012 My wife and I are both shareholders and directors in a private company. I have 60%, she has 40% shares.
I wish to transfer a small amount of shares (less than 1%)to two of my relations (neice and her husband) from my own holding of 60%.
What is the correct procedure?
I ask because my wife WILL NOT AGREE to the tranfer because our marriage is under strain now. How best can I do it without her agreement?

Guest

Guest (Expert)

20 October 2012 You can transfer your shares by using share transfer form and you can get this form from any share broker. If you didnt get it. You can contact me at kailash.moondra@yahoo.com .

Querist : Anonymous

Querist : Anonymous (Querist)

20 October 2012 Does the share transfer require
1. Approval of Board of Directors
2. Approval of other shareholders?

Thank you

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Ajay Mishra

Ajay Mishra (Expert)
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20 October 2012 Hi

Procedure for transfer of shares of private company:

Generally articles contain the detailed provisions as regards the procedure for transfer of shares. Usually following steps shall be followed by a private company to give effect to the transfer of shares:—
(i) Transferor should give a notice in writing for his intention to transfer his share to the company.
(ii) The company in turn should notify to other members as regards the availability of shares and the price at which such share would be available to them.
(iii) Such price is generally determined by the directors or the auditors of the company.
(iv) The company should also intimate to the members, the time limit within which they should communicate their option to purchase shares on transfer.
If none of the members comes forward to purchase shares then the shares can be transferred to an outsider and the company will have no option, other than to accept the transfer.
It is to be noted that any transfer of shares to an outsider without complying with the procedure as specified in the articles for effecting transfer of shares will not be operative against the company. Even in the case where the procedure prescribed by the articles was not followed and such failure was not due to any fault on the part of the selling shareholder, the transfer to an outsider was held not to be effective.
Transfer of shares without consent of holder of shares and without prior sanction of board of directors as required under articles of association of a private company concerned could not be held to be valid. [John Tinson Co. (P) Ltd. v Mrs. Surjeet Malhan (1997) 88 Comp Cas 750 (SC)].

Querist : Anonymous

Querist : Anonymous (Querist)

20 October 2012 Thank you Ajay ji for a very comprehensive and useful reply. Much appreciated.
So it seems I cannot transfer shares if my wife does not agree!
Is there a way out, for example by issuing more shares (instead of share transfer). Does that follow a similar procedure (hence also doomed to failure)?

Ajay Mishra

Ajay Mishra (Expert)
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22 October 2012 Hi

Yes you can issue few more shares to other members and i will also suggest you ti enter more directors in board to control the management.

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