Filing annual accounts of company (form 20b)

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PRASHANT SHARMA (Querist)
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27 November 2013 Sir,
In my case, a Company registered dated 23/05/2012 having 6 directors each holding 2000 of Equity Shares (Details as filed in FORM-1). During the Financial year, due to some disputes among the shareholders, 2 of them resigned on 01/07/2012. We have duly filed FORM 32 on 01/08/2012 for the same.And we assumed that all Shares of the resigned Shareholders transferred to one of the existing Shareholder of the company (have not filed any form for Transfer of Shares).

Now, while filing its First Annual Returns (FORM 20B), we have properly given the details of all the existing & resigned directors (Date of ceasing wherein applicable)

Now, the point is that we want to normally show the shares of resigned directors' (2000+2000=4000) added to share holdings of 1 of the existing shareholder.

Is our point of view is correct according to the provisions of Company Law and process or not?

if not what is the actual process for the same(for 1st FORM 20B)?

Please highlight the same as your earliest.

CS Taher

CS Taher (Expert)
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27 November 2013 In ur case the Directors are the promoters and the shareholders.
Shareholders cannot resign thy can transfer their shares.
Since you have filed form 32 thn u must hav recorded in the minutes of the company, in the same board meeting u need to approve one more resolution regarding the share transfers and u need to fill the transferee and transferor details in share transfer form 7B as per provisions of Sec108 of the companies Act 2013 properly signed and stamped place before the board for approval only after which you can intimate the same to ROC through filing form 20B showing the transfers.

Ajay Mishra

Ajay Mishra (Expert)
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27 November 2013 Company can not take assumption. The resigned director will be treated as member of the company unless, the shares have been transfered by them and the Board has approved the transfer.

After approval you will make entry in the register of member.

In Form-20B, you will fill the details oh holding of shares. If you have not made any entry of transfer till AGM. Then such resigned director will be considered as member of the company.

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Ajay Mishra

Ajay Mishra (Expert)
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27 November 2013 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.
(V) the transferor will submit the following documents with company:
(a) Original Share certificate
(b) Transfer deed (Form-7B) properly executed with stamp duty of proper amount.
© any other documents relating thereto.

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)].