Share Transfer Process India

The Transfer of Corporate Ownership

Expert assistance for share transfer in Private Limited companies. We handle SH-4 forms, stamp duty payment, and board resolutions for legal transfer.

Legally transfer shares of your Private Limited Company. Complete the process with proper documentation, stamp duty, and ROC intimation.

Changing ownership? Transfer shares of your company legally with standardized SH-4 forms, verified board approvals, and proper stamp duty payments.

In a Private Limited Company, the right to transfer shares is usually restricted by the Articles of Association (AOA) to ensure that control remains within a trusted group. However, shares can be transferred among existing members or to new investors by following a prescribed legal process.

The process involves the execution of a 'Share Transfer Deed' in Form SH-4, which must be signed by both the transferor (seller) and the transferee (buyer). This deed is then submitted to the company for approval by the Board of Directors. Once approved, the company updates its statutory registers and issues new share certificates.

QuickTaxperts provides professional support for share transfers, including drafting the resolutions, assisting in the payment of stamp duty, and ensuring that all ROC records are updated in the next annual return.

• Category: Compliance
• Check AOA for any pre-emptive rights or restrictions on transfer.
• Transfer is complete only when the Board passes a resolution and entries are made in the Register of Members.
• Stamp duty is mandatory and is calculated on the value of the shares being transferred.
• Requires surrender of original share certificates for endorsement.
• Applicable to Private Limited and Public Limited companies
• Requires execution of Share Transfer Deed (Form SH-4)
• Mandatory payment of stamp duty (0.015%)
• Updates to the Register of Members (MGT-1) and share certificates

Stamp Duty on Share Transfer

The government fee for equity transfer.

As of 2020, the stamp duty rate for the transfer of shares (both physical and demat) is standardized at 0.015% of the consideration value. For physical shares, the duty is paid by purchasing physical or e-stamps and affixing them to the SH-4 form.

Failure to pay the correct stamp duty makes the transfer deed inadmissible as evidence in court and can lead to penalties from the state revenue department.

Documents required

Document requirements vary by entity type, state, premises, and authority. These are the usual groups we verify before submission.

• Transfer Checklist: Form SH-4 (Share Transfer Deed) duly filled and signed.; Original Share Certificates of the shares being transferred.; Identity and Address Proof of the Transferor and Transferee.; Board Resolution of the company approving the transfer.; Proof of payment of Stamp Duty (0.015%).; PAN cards of both parties (Buyer and Seller).

Process and timeline

• Intimation: The transferor notifies the company of their intention to sell/transfer shares.
• Deed Execution: Executing Form SH-4 with the signatures of both parties and witnesses.
• Stamp Duty: Paying the 0.015% stamp duty and affixing the stamps to the SH-4 form.
• Board Approval: The company's Board of Directors reviews and approves the transfer in a formal meeting.
• Register Update: The company updates the Register of Members (MGT-1) and endorses the share certificates.

Expert review

Share Transfer Process India content is reviewed by QuickTaxperts Corporate Team, Legal & CS Consultants.

• Checklist-led review
• Document pre-verification
• Authority-specific next steps

Frequently asked questions

These quick answers cover common planning questions before you request a checklist or quote.

• What is Form SH-4?: Form SH-4 is the standard Share Transfer Deed used for the physical transfer of shares in a company.
• What is the stamp duty rate?: The current stamp duty rate for share transfer is 0.015% of the total consideration/value.
• Can a company refuse to transfer shares?: A Private Limited company can refuse if the transfer violates the restrictions mentioned in its Articles of Association (AOA).
• Do I need to inform the ROC immediately?: No, share transfers are usually reported to the ROC in the Annual Return (Form MGT-7) filed after the end of the year.
• What happens if I lose the original share certificates?: You must apply for 'Duplicate Share Certificates' by following a process involving an FIR and public notice.
• Is a gift of shares taxable?: Gifting shares to 'relatives' as defined under the IT Act is generally not taxable for the receiver, but check with a tax advisor.
• Who pays the stamp duty?: Generally, the buyer (transferee) pays the stamp duty unless otherwise agreed between the parties.
• How long does the board have to approve the transfer?: The board must approve or reject the transfer within 30 days of receiving the transfer deed.