PROCEDURE FOR TRANSMISSION OF SHARES WITH ROC

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JAMES VERGHESE (Querist)
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08 February 2021 In a private company, two directors(husband & Wife) were there, in which, one of the director expired. What is the next procedure to transmit the shares and ROC Filing

Please guide me

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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10 July 2024 When a director of a private company passes away, especially if they were a shareholder as well, there are specific procedures that need to be followed regarding transmission of shares and ROC (Registrar of Companies) filings. Here’s a step-by-step guide on what to do:

### 1. Transmission of Shares:

- **Identification of Legal Heirs:** Determine who the legal heirs of the deceased director/shareholder are. This typically involves obtaining a legal heirship certificate or succession certificate from a court of law.

- **Transfer of Shares:** The shares held by the deceased director will need to be transferred to their legal heirs. This process is known as transmission of shares.

- **Board Resolution:** Convene a meeting of the Board of Directors to pass a resolution acknowledging the death of the director, recording the transmission of shares to the legal heirs, and updating the company's records accordingly.

- **Share Transfer Deed:** Prepare a share transfer deed or instrument of transfer to formalize the transfer of shares to the legal heirs. This document should be executed by the legal heirs as transferors and the company as transferee.

- **Stamp Duty:** Pay applicable stamp duty on the share transfer deed as per the laws of the respective state where the company is registered.

- **Submission to Company:** Submit the executed share transfer deed along with the necessary documents (legal heirship certificate, board resolution, etc.) to the company for registration of the transfer.

### 2. ROC Filing:

- **Formalities:** File necessary forms and documents with the Registrar of Companies (ROC) to update the company’s records regarding the change in shareholding due to the death of the director.

- **Forms to File:** Typically, you would need to file the following forms with the ROC:
- Form DIR-12: for intimating changes in directorship (removal of deceased director).
- Form SH-4: for transmission of shares.
- Form MGT-7: for filing annual return with details of directors and shareholders.

- **Attachments:** Attachments may include copies of board resolution, share transfer deed, legal heirship certificate, and any other relevant documents as required.

- **Payment of Fees:** Pay the prescribed fees for filing these forms with the ROC.

### 3. Compliance and Documentation:

- **Update Records:** Ensure that the company’s registers, such as the Register of Members and Register of Directors, are updated to reflect the transmission of shares and change in directorship.

- **Maintain Records:** Keep copies of all documents filed with the ROC and resolutions passed for future reference and compliance audits.

### Additional Considerations:

- **Tax Implications:** Consult with a tax advisor to understand any tax implications arising from the transmission of shares and inheritance laws applicable to the deceased director's estate.

- **Legal Advice:** Seek legal advice to ensure compliance with all applicable laws and regulations regarding transmission of shares and directorship.

By following these procedures and ensuring all necessary filings and documentation are in order, you can successfully manage the transmission of shares and ROC filings after the death of a director in a private company.