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Change in director with share transfer

rits (Student CA Final ) (93 Points)

20 May 2022

A director holding 50% share in pvt ltd company wants to resign.
A new director is to be appointed who will hold 10% share.
so new shareholding ratio for old director and new director will ne 90:10
can anyone help me plz...
what should be the process of share transfer and director change??
what Roc compliance are required in this case.
plz help.

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5 Replies

Chirag (Professional) (1979 Points)
Replied 02 June 2022

For Director Change ,You Have to Appoint New Director with following docs
Board Resolution to appoint him/her as an additional director
DIR-2(Consent to act as a director )
Declaration as to Non Disqualification DIR 8
DIN ( Mandatory)
ID Proofs
DIR 12

Unless Otherwise Provided in AOA ,there is no need of any qualification shares by director

So ,for appointment of director it's not mandatory that shares transfer to happen

Old Exiting director will be shareholder ( surely a promoter )

If it required transfer then
old director has to show his intention to board to sell shares at price to either new director or to other shareholder

if board agree on new director purchase or old shareholder are not intersted in buying then with SH 4 ( duly stamped ) shares will be transferred to new allottee and ROM Will be updated

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rits (Student CA Final ) (93 Points)
Replied 02 June 2022

Ohk thanks.. i got the process of director change.
but when to transfer therse share?
retiring director is holding 5000 share out of them 4000 is to be transfer to another old director and 1000 to the new director.
what forms are required for such transfer and when to file them?
plz reply sir

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Chirag (Professional) (1979 Points)
Replied 02 June 2022

Both are separate events and can't be correlated to each other , appointment is a board process while transfer of share is investor induced event ( in most cases ), so you can induct new director while shares can be purchased later ,however ,if there is a precondition to purchase shares then purchase txn should happen firstv , as i said earlier ,SH 4 Is required and it to be submitted within 60 days of execution (duly stamped/franked) (Assuming pvt co don't demat shares)

disclaimer - For education purpose only ,should not be construed any professional advice

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MADHAVSINGH RATHORE (9 Points)
Replied 03 June 2022

But how it is possible for pvt limited company,
outsider how can be member of Company, firs they need to appointment process then he can transfer the share

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Chirag (Professional) (1979 Points)
Replied 03 June 2022

Outsider can become member in Pvt company ( there is no restriction on the company law ( again I'm highlighting that there should not be any contrary mentioned in AOA) , just one thing for new allotment sec 42/62 has to be followed while for inter se transfer ,the existing holder have pre emptive right ,so first offeer will be made to existing holder , otherwise with the board nod and shateholder approval shares can be transferred (If AOA says shareholder can't sell to outsider ,then first amend AOA )

Giving you for example only - by following section 42/62 and rules shares can be allotted to VC/private equity ,Just Like One Indian Pvt ltd ecommerce allot shares to US retail giant ,on basis of existing holder s/r and SHA

for sell directly by founders/promoters there is board process of approval ,valuation and in some cases shateholder approval and with SH4 shares can be transferred

I AM AGAIN REITERATING THAT TO BECOME DIRECTOR IN PVT CO* THERE IS NO NEED TO ACQUIRE ANY SHARES (UNLESS ITS A PRE CONDITION AS PER SHAREHOLDERS AGREEMENT /CHANGE IN CONTROL OR AOA)

I hope it clears to you ,read it in conjunction with my previous two replies

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