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Share capital

Amar (Business) (89 Points)

28 November 2011

i have pvt ltd company to authorised Sare capital is 50,000/- shares @ Rs. 10/- each company have five directors, one of the director have 49,600 share and remaining each directors have 10 shares respecitvely.

now my question the above said four directors who they have 10 shares are resigned from the company. after one month two new directors are appointed.

in this regards

1) how to assign the shares for newly appointed directors.

2) how to show the accouts, from resigned directors shares and newly appointed shares.

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10 Replies

Charu Srivastava (Company Secretary) (4210 Points)
Replied 28 November 2011

There are two recourse of your situation

a). If the resigning Directors are willing to transfer share in that case transfer deed should be executed and transfer the shares to new Directors.

b). Allot new Shares to the new directors by filing form 2.

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Ashok kumar (CA Final) (587 Points)
Replied 28 November 2011

agee with Charu Srivastava, moreover in your question directors are not discharge from their shareholding rights.

Smriti Dhawan (Company Secretary ) (347 Points)
Replied 28 November 2011

Mr. Amar ji

Kindly Clarify what is authorised share capital and paid up share capital of your company, if 50,000 shares of 10 each is issues and paid up.

One director holds 49,600 and other 4 holds 10 shares each the total share issued will be 49640 shares. I think each director must be holding 100 shares each then it will amount to 50,000 of 10 each 5 lacs.

I, totally agree with Charu that there cen be two options either to allot shares or transfer shares to appoined director.

But, one more thing is to be kept in mind the authorised share capital of the company, if authorised and paid up capital of the company are same then you have to increase the authorised share capital of the company.

Amar (Business) (89 Points)
Replied 28 November 2011

thankq charu can i transfered the shares from four directors without intimating them and without executed transfer deed. if it is not possible plz attached the transfer deed format.

how to transfered the share to newly appointed directors. it must be a reflect a cash or bank

CS Ankur Srivastava (Company Secretary & Compliance Officer) (17853 Points)
Replied 28 November 2011

Dear Amar,

First of all as rightly mentioned by Ms. Smriti, remaining 4 directors must have 100 shares each.

Secondly, it is not mandatory to transfer the shares on change of directorship. The Company can have different directors from its shareholders.

However, if you want to transfer the shares from old directors to new directos as well, you can use transfer deeds and tranfter the shares.

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Pankaj Arora (Learner) (3134 Points)
Replied 29 November 2011

Suppose in above question old director want to sell their shares to new director can old director sell their shares @ premium to new directors?

Smriti Dhawan (Company Secretary ) (347 Points)
Replied 29 November 2011

Transfer of Shares in case of Private Company is goverened by AOA of the company, normally articles contain provision with this regard and provide that the shares are to be sold at fair price determined by Director or Auditor of the Company.

Shares can be transfered by old Director to the new director appointed at price above its face value but for the pupose of transfer of shares the amount above the face value is not called Premium.

Chintan (Accounts and Finance Executive CS Executive Pursuing) (98 Points)
Replied 29 November 2011

To : Ms. smriti , Kindly tel me why is it so dat for the purpose of transfer of shares the amount above the face value is not called premium ??

Thanks in advance

Pankaj Arora (Learner) (3134 Points)
Replied 29 November 2011

If old director has sell their shares to new director more than its face value amount . we have also filed necessary document relating to appointment of new director and resignation of old director now pls let me know that what we have to pass entry in our books of shares sell by old directors to new director?

Smriti Dhawan (Company Secretary ) (347 Points)
Replied 29 November 2011

It is the change of ownership of shares to someone else with due registration with the company. It is a process of changing a title to shares with the approval of the company.

There are two parties involved in the transfer of shares. The one who transfer the share in the name of another person is known as transferor (old Director) and the person to whom the share are transferred is known as transferee (new appointed Director).

Procedures regarding Transfer of Shares:

(1) Verification of legal provision: Check if there is a provision in the Articles of Association regarding the transfer of shares. If there is a provision in the Articles, go ahead regarding the transfer of shares, if there is no provision he cannot go ahead with the procedure of transfer of shares.

(2) Receipt of documents for transfer: The transferor and transferee jointly, submit the Share Transfer deed (Form 7B ) from the ROC of the state where registered office of the Company is situated which should be duly completed, signed and stamped for the purpose of transfer at the company's office. The share certificate is also submitted.

(3) Verification of transfer documents: Check the transfer documents submitted by the transferor and the transferee. You have to check that the share certificate has been attached alongwith all the details given in the transfer documents and see if they are in order.

(4) Issue of notice of transfer to transferor and transferee: Company then issues a notice of lodgement of transfer to the transferor and transferee requesting them to send their objection, if any within fourteen days after they receive the notice.

(6) Entry in the transfer register: If no objections have been received by either the transferor and the transferee, Company then enters the details of the transfer in the Transfer Register. He has to get the old share certificate endorsed in the name of the transferee.

(7) Board meeting for the approval of transfer: A meeting of Board of Directors will be called. In this meeting, a resolution will be passed regarding the transfer of shares. Once the resolution has been passed, the You have to remove the name of the transferor from the Register of members and include the name of the transferee.

(8) Intimation to Transferee and dispatch of share certificate: Once the transfer is initiated, the Company will inform the transferee about the transfer and that the share holders may come and collect his new share certificate or endorsed certificate against the transfer receipt. For those transferees who cannot come to collect the new share certificate, it will be sent to their registered addresses as per the instructions of the transferee.

This procedures is to be followed by the Company while transferring the shares of a particular shareholder it does not matter whther a person is director of the Company or not. And in your case if Director has resigned from the Company it does not mean that he cannot holds shares of your company he can be member (shareholder) of your company even after resignation from the directorship. And it is not necessary that new director who is appointed should have shares your Company.