A friend of mine is a Director in a private limited company (not a subsidiary of any company).
He proposes to resign from the directorship (the process of which, I am aware) and transfer shares to the new incoming Director (who shall take the shares).
May I request someone to elaborate the practical steps from the beginning from my friend’s point of view, his responsibility and the company’s responsibility as well?
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If any URL available with detailed steps on such process, please share so that I will go through the same and understand the subject.
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)].
1. After receiving Transfer Deed(Instrument of Transfer), Share Certificate and other documents, if any. 2. Check all documents is proper and eligible to register for transfer. 3. Call Board Meeting 4. At Board Meeting register the Transfer and made entry in the Register of Members and Register of Transfer. 5. Return the Share Certificate after making entry of transfer therein within 2 months. 6. Make entry in the minutes of Board Meeting. 7. The detail of Transfer from last AGM till the date of AGM should be submitted in Annual Return to ROC in Form-20B.
10 October 2013
Thanks a lot for your guidance. - - - - -
If the company is a loss company, can the share price be fixed at face value.
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Say the value of share transfer is Rs.5 Lacs, how the transferor will comply with stamp duty? (Is it 25 paise per 100?).
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While filling the Form-7B, the transferor should fill relevant details from the share certificate issued, sign at one place only (straight across the name) and thereafter, transferor should get signature of a witness with name and address in full. Please confirm.