16 February 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. My query is
1. What is the procedure for such transfer ? 2. What records do the company need to maintain regarding this transfer and is any intimation to ROC required?
3. What should be the price at which the shares would be transferred? can they be transferred at their face value of Rs. 10/-? 4.What is the implication of this transfer under the Income Tax laws on company or existing member or new member?
5. is it mandatory to issue share certificates after the transfer?
16 February 2011
My point wise answers are as under:
1 The purchaser and seller has to execute valid Tranfer Forms ( the ROC stamp should not be beyond 6 months old) duly signed. A court fee stamp @0.50% of sales considertaion to be affixed. The purchaser has to deliver the transfer form with original share certficate to the company for affecting tranbsfer. On receipt of same company should call meeting of board and approve the tranfer and after approval send back share ecrtficate with endorsement on back of it for tranfer and covering letter informing purchaser of tranfer of shares in their naem. Company shpould also defaced the transfer form and court fee stamp.
2 Company should have tranfer form as defaced and minuts of board approving transfer. there is no need to intimate ROC at the tiem of transfer , however at the time filing annual return it should fill detail of tranfer happened betwen 2 AGMs.
3 The price should be net asset value
4 No implication on company. The excess sales considertaion will be trated as Capital Gain in hands of seller.
5 Not new one but with endorsement of tranfer on back side
16 February 2011
@ Ankush Since the current case is regarding transfer of shares in a private company, for valuation of shares tranfered please check whether there is any provision in the articles of the company. Since in the present case their is only two directors and shareholders in the company, their should not be any dispute regarding valuation of shares, but still it should be valued properly and in case of dispute a certificate from the Auditors of company should be taken. Normally AOA of Pvt Co stipulates that in case of dispute regarding valuation of the value of shares determined by the Auditors will be final.
The new shareholders will receive Share Certificates in accordance with the companies ( Issue of Share Certificates) Rules 1960 and the certificates will be signed by two directors and will be countersigned by the any officer or company secretary duly authorized by a board resolution and common seal be affixed in their presence and furthermore necessary entries be made in register of members of the company, regarding the share certificate numbers. For existing shareholders necessary endorsement has to be made in the Share certificate.
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