Share Transfers in Pvt. Ltd. Company

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Suman Khurana

ACS

130 Points Posted on 20 July 2009

Status: C pvt. ltd. has the follwoing sgareholding pattern:

A ltd.: 50%
B Ltd.: 49%
D: 1 %.

Now B ltd. wants to transfer its entire shareholding in C pvt. Ltd. to A Ltd. at its face value.

Query: 1. Whether filling of Share Transfer Form and handing over the same to C pvt. Ltd. alongwith shares certificates and passing of Board resolution in C pvt. Ltd. is suffice?

I think its suffice but following procedure is given in Bharat Publications for transfer of shares in pvt. ltd. company:

"(i) Transferor should give a notice in writing for his intention to transfer his share to the company.
(ii) The company in turn should notify to other members as regards the availability of shares and the price at which such share would be available to them.
(iii) Such price is generally determined by the directors or the auditors of the company.
(iv) The company should also intimate to the members, the time limit within which they should communicate their option to purchase shares on transfer."

2. Should i need to follow this procedure?

Regards
Hinna Garg

Replies (2)

CS Ekta

Company Secretary

230 Points Posted on 20 July 2009

Hi Hinna,

A Pvt Ltd Co can impose restriction on the transfer of shares under the provisions of the Article of Association. There are 2 kinds of provisions which can be incorporated in the Articles of the Company for this purpose. They are:

1. Power of Directors to refuse transfer of shares.
The power of the Board of Directors to refuse registration of transfer of shares must be in the interest of the company and the general body of share holders.

2.Pre-emptive rights.
A right of pre-emption is incorporated in the articles of a Private Company to restrict the members’ right to transfer shares to non members.

So before transfer please refer the articles of the Company to find out whether any kind of restriction is imposed and follow the procedure given thereunder