procedure for transfer of shares of private limited company

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Ankush Pagaria (Querist)
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13 April 2011 Dear All,
A company XYZ private Limited is already incorporated. The existing 2 directors of the Company hold shares in equal ratio (i.e 5000 shares @ Rs10 each are held by each director). Now these shareholders want to introduce more 3 people in the Company as shareholders without increasing the paid share capital. so this can be done only by transferring the existing shares to new members such that each of them hold 2000 shares (20%) holding.

now the query is

1. please explain step by step procedure for transferring the shares (along with relevant resolutions)

2. how the new share certificates will be issued. do we need to cancel all te earlier share certificate and issue new one's to all the old as well as existing shareholders

3. how is the stamp duty to be paid. whether franking is possible or stamps are to be affixed. stamping or stamping has to be done on which docuemtn i.e. share certificatr or transfer deed?.

Jayashree S Iyer

Jayashree S Iyer (Expert)
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15 April 2011 Answers to your query are given below:

1.please explain step by step procedure for transferring the shares (along with relevant resolutions)

For transfer of shares, get the share transfer form (7B) duly stamped and signed by the transferer and the transferee alongwith original share certificate.

Within 3 months, transfer the shares in the name of the transferee.

Make necessary entries in the share transfer register and the register of members.

Issue Share Certificate.

2. how the new share certificates will be issued. do we need to cancel all te earlier share certificate and issue new one's to all the old as well as existing shareholders

If all the shares in a share certicate are transferred, then you can write the name of the transferee at the back of the share certificate giving details of ledger folio number, transferee name, etc.

However if only part of the shares are transferred then you will have to cancel the SC and issue fresh SCs.

3. how is the stamp duty to be paid. whether franking is possible or stamps are to be affixed. stamping or stamping has to be done on which docuemtn i.e. share certificatr or transfer deed?.

We have been affixing the stamps physically. I don't know whether franking is possible. I shall be thankful if anyone can throw light on this?