Legal Assistance by Nd Salva
Transferring shares in a Private Limited Company is a structured legal process governed by the Companies Act, 2013
and the company’s Articles of Association (AOA). Whether you're onboarding new investors, restructuring ownership, or
handling an exit, share transfer must be executed carefully to remain compliant.
At Nd Salva Advocates & Legal Consultants, we manage the complete share transfer process—from document
drafting to Board approvals—ensuring a smooth and lawful transition of ownership.
What is Share Transfer?
A share transfer is the voluntary transfer of ownership rights from an existing shareholder (transferor) to another
individual or entity (transferee). Shares in a private company are movable property and can be transferred unless
restricted by the AOA.
Governing Laws & Provisions
- Section 56(1) & 56(3) of the Companies Act, 2013
- Rule 11 of the Companies (Share Capital and Debentures) Rules, 2014
- The company’s Articles of Association (AOA)
Key Share Transfer Regulations in Private Companies
- Pre-emptive Rights: Existing shareholders get the first right to buy shares before they are offered to outsiders.
- Right to Refuse: The Board may refuse transfers as per AOA conditions.
- Restrictions: Private companies impose restrictions to maintain ownership control.
Parties Involved
- Transferor: Existing shareholder selling the shares
- Transferee: Buyer of the shares
- Company: Updates records and issues new share certificate
- Board of Directors: Approves/rejects the transfer
- Legal Representatives: In case of transfer due to death
Documents Required
- Form SH-4 (Share Transfer Deed)
- Original Share Certificate
- PAN of Transferee
- Board Resolution approving transfer
- No Objection Certificate (NOC) from transferor (if needed)
- Indemnity Bond (optional)
- Stamp Duty as per State laws
Step-by-Step Share Transfer Process
1. Review AOA
Check restrictions, pre-emptive rights, and transfer clauses.
2. Notify Company
Transferor submits written notice to determine share valuation.
3. Offer to Existing Shareholders
Right of First Refusal must be exercised before external transfer.
4. Execute Form SH-4
Signed, stamped, and witnessed as per legal requirements.
5. Submit to Company
Provide the deed, certificate, and supporting KYC documents.
6. Board Approval & New Certificate
Company cancels old certificate and issues new one to transferee.
Compliance & Legal Considerations
- Stamp duty must be properly paid
- Incorrect process may lead to rejection or shareholder disputes
- Board resolutions must be accurate and properly recorded
- AOA provisions must be strictly followed
Why Choose Nd Salva?
- Expert drafting and vetting of SH-4 deeds
- Compliance with Companies Act & AOA rules
- Guidance on valuation and legal risks
- Full support for board approvals and ROC queries
- Coordination for issuing updated share certificates