Overview
In a Private Limited Company, ownership is represented by shares. When a shareholder wishes to sell or gift their shares to another person (or an existing shareholder), a formal legal process must be followed under Section 56 of the Companies Act, 2013. This involves executing a Share Transfer Deed (Form SH-4), paying the mandatory government stamp duty (0.015% of the consideration value), and obtaining approval from the Board of Directors. Failing to properly execute and stamp SH-4 renders the transfer legally void.
What is Included in Our Package
Detailed compliance and filing scope managed by JRC corporate experts.
Documents Required to Start
Upload digital files during onboarding. No physical submissions needed.
Shareholder Documents
- Original Share Certificate of the transferor
- PAN Card and Aadhaar Card of the Transferor (Seller)
- PAN Card and Aadhaar Card of the Transferee (Buyer)
Corporate Documents (We draft these)
- Form SH-4 (Share Transfer Deed)
- Board Resolution approving the transfer
- Notice of transfer to existing shareholders (if required by AoA)
Step-by-Step Transfer Timeline
Our step-by-step advisory workflow.
Step 1: Drafting SH-4
We draft the Share Transfer Deed (SH-4) detailing the number of shares, face value, and total consideration amount.
Step 2: Stamping & Execution
The transferor and transferee sign the SH-4. Appropriate share transfer stamps (0.015%) must be affixed and cancelled on the deed.
Step 3: Board Approval
The executed SH-4 and original share certificate are submitted to the company. The Board holds a meeting and passes a resolution approving the transfer.
Step 4: Endorsement & Register Update
The company endorses the new owner’s name on the back of the share certificate and updates the Statutory Register of Members (MGT-1).
Key Advantages of Formal Share Transfer
Strict compliance ensures the new owner's rights are legally protected.
Valid Proof of Ownership
A formally endorsed share certificate and updated Register of Members (MGT-1) is the ultimate legal proof of ownership in a private company.
Comply with Articles of Association (AoA)
Private companies have restrictive share transfer clauses in their AoA (like Right of First Refusal). We ensure the transfer doesn't violate these clauses.
Avoid Future Disputes
Properly stamped and executed documents prevent family or investor disputes over equity ownership years down the line.
Frequently Asked Questions
Helpful answers to common regulatory inquiries.
Do we need to file any form with the MCA immediately?▼
No. Unlike changes in directors (DIR-12), there is no immediate form to be filed with the MCA for a share transfer. The transfer is reported to the MCA during the annual filing of Form MGT-7.
What is the time limit for executing the transfer?▼
The executed and stamped Form SH-4 must be delivered to the company within 60 days from the date of execution by the transferor/transferee.
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