Everybody starts a share transfer by asking how to fill the form. For a large number of private companies there is no longer a form to fill. The rule that took it away. Rule 9B of the Companies (Prospectus and Allotment of Securities) Rules, 2014, inserted by notification dated 27 October 2023, requires every private company other than a small company to hold and issue its securities in dematerialised form — and requires a holder to dematerialise before transferring. The compliance date was extended to 30 June 2025, and that date has passed. The change that handed it back. From 1 December 2025 a small company means paid-up capital up to ₹10 crore and turnover up to ₹100 crore, raised from ₹4 crore and ₹40 crore. Companies that were inside rule 9B in 2024 are outside it now. Which is why the published guidance is unreliable. Anything written between October 2023 and December 2025 describes one half of a boundary that has since moved, and it will be wrong in one direction or the other. Everything else is unchanged and still catches people. Section 56 still wants the instrument duly stamped, dated and executed by both sides, delivered to the company within sixty days of execution, with the certificate. The new certificate is due within one month of the company receiving it. A private company refusing registration must give reasons, within thirty days. Start by establishing which side of the small company line your company sits on. Until that is settled, nothing else on this page applies to you.
What is on this page
Section 44 of the Companies Act, 2013 says it in one line: the shares, debentures or other interest of any member in a company are movable property, transferable in the manner provided by the articles of association. Two ideas are packed into that, and most of the trouble in this area comes from taking the first and ignoring the second.
The first is that a share is property. It can be sold, gifted, mortgaged, inherited and fought over like any other thing somebody owns. It is not a membership card issued at the company pleasure, and the company cannot take it away because it has stopped liking the holder.
The second is that it is transferable in the manner the articles provide. Not in whatever manner the parties agree. Not in the manner a lawyer thinks sensible. In the manner that particular company own constitutional document lays down. For a private company those articles very often say something restrictive, and the statute hands them that power expressly.
So the Act supplies the machinery and the articles supply the permission. A transfer can satisfy every provision described on this page and still fail, because the articles said it could not happen that way.
In a private company, restrictions on transfer are the norm rather than the exception. They are, in a sense, what makes it private: the company exists partly to keep its shares out of the hands of people the existing members did not choose.
The usual forms are familiar. A pre-emption right, under which a selling member has to put the shares in front of the existing members before anybody outside, usually at a price set by a formula or by an independent valuer. A right of first refusal, under which an outside offer must be matched or declined by the existing members. A lock-in, under which nobody may sell for a stated period. A requirement of board approval. A tag-along or drag-along clause, bringing other holders in or out alongside a majority.
A shareholders agreement may add more, and where it does there is a question about how it interacts with the articles that is well outside the scope of a documentation file. What matters practically is simple: somebody has to read those documents before an instrument is drafted, and on a surprising number of transfers nobody has, because everybody assumes a sale between people who agree needs no permission.
Read the articles first, every time. They are usually nine to fifteen pages, they were signed at incorporation and nobody has looked at them since. A transfer executed in breach of a pre-emption clause is a problem on which the stamp duty has already been paid.
Two separate things happen when shares change hands, and conflating them is the commonest conceptual error on this subject.
There is the bargain: who is selling, to whom, how many, at what price, with what warranties, on what conditions, with what happens if something turns out to be untrue. That is contract, and on anything of size it lives in a share purchase agreement, which is dealt with on its own page.
Then there is the conveyance: the step by which the shares actually move from one holder to another in the company records. That is what this page is about. It is a statutory process, it does not care what the parties agreed, and it either complies or it does not.
The two are independent in both directions. A perfect agreement with no registered transfer leaves the buyer with a contractual claim and no shares. A registered transfer with no agreement leaves the parties with shares moved and nothing recording the terms. On small transfers between people who know each other, the second is the more common failure.
Two independent things. The bargain — price, payment, conditions, warranties — which is contract. The conveyance — the statutory step that moves the shares in the company records. A perfect agreement with no registered transfer leaves the buyer with a claim and no shares.
Where both exist, they do different jobs and should say different things. The agreement carries price, payment mechanics, conditions, warranties, indemnities and what happens on breach. The instrument carries the bare facts the company needs: who, to whom, how many, which shares, executed, dated and stamped.
Problems arise when people try to make one do the other job. An instrument of transfer with commercial terms written into it is not improved by them; it is a statutory form being used as a contract, and the company registering it has no interest in those terms. An agreement with no instrument behind it moves nothing.
On a transfer between a founder and a new investor, or on anything where money is moving in stages, the agreement is where the protection lives and the instrument is the last step. On a transfer between two brothers who have already settled everything, there may genuinely be nothing for an agreement to do, and the instrument plus a clear board record is the whole of it. Which of those you are in is worth deciding deliberately rather than by default.
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Here is the point to hold onto through everything that follows. The register of members is the company record of who its members are. Not the share certificate. Not the cap table. Not the shareholding schedule in the last investor deck.
A share certificate is evidence of title, and good evidence, but it is evidence of what the register said when it was issued. If the register has moved on and the certificate has not been surrendered, the certificate is a historical document in somebody drawer. A cap table in a spreadsheet is a management convenience with no statutory standing at all.
Which is why a transfer is not complete when the money is paid, or when the form is signed, or when the board approves it. It is complete when the entry is made. Everything before that is preparation, and a transferee who has paid and has a signed form but is not on the register holds a claim rather than a shareholding.
Transfer is a voluntary act between two parties. Transmission is what happens by operation of law, without anybody executing anything: on death, on insolvency, on the appointment of a receiver.
The distinction runs through the whole of this subject. Section 56(2) preserves the company power to register a transmission, expressly separating it from the instrument requirement in sub-section (1). There is no instrument of transfer on a transmission, because there are not two parties to execute one. There is no stamp duty of the kind described later on this page, because the duty attaches to the instrument and there is none.
What the company wants instead is evidence of entitlement, and which document satisfies it depends on the estate and on the company own requirements. Where securities form part of a deceased estate, the document in question is frequently a succession certificate, which is dealt with on its own page and which covers debts and securities specifically.
People arrive asking for a share transfer when what has actually happened is a death, and the first ten minutes of the conversation are spent establishing which of the two we are in.
Clients ask for a share transfer when somebody has died. That is transmission, not transfer: no instrument, no two parties executing, no duty of the kind described here. Establish which of the two you are in before anything is drafted.
A private company can run for a decade without anybody looking at any of this. No regulator asks to see the register of members. No bank asks for the register of transfers. The annual filings go out, the auditors sign, and the shareholding sits in a spreadsheet that everybody treats as authoritative because everybody has always treated it as authoritative.
Then one of four things happens. Somebody wants to sell. An investor begins diligence. A bank wants security over shares. Or a shareholder dies. At that moment the register is produced, and it turns out to have stopped in 2019.
The costly part is not the repair. It is that the repair has to happen at the exact moment somebody is waiting, and it is discovered by the counterparty rather than by you. A buyer who finds a four-year gap in the register has learned something about how the company is run, and that discovery prices itself into the transaction.
The register is a cheap thing to keep and an expensive thing to reconstruct. Writing it up as transactions happen costs an hour a year. Reconstructing six years of it under time pressure costs considerably more, and it happens in front of the person you were hoping to impress.
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It helps to be clear about who is actually involved, because responsibilities get assumed onto the wrong shoulders.
The transferor. Executes the instrument, surrenders the certificate, and under section 9B of the Indian Stamp Act bears the stamp duty on an off-market transfer.
The transferee. Also executes the instrument — this is the one most often missed — and is the person with the appeal right if registration is refused.
The company. Receives the instrument, registers or refuses, maintains the register, and issues the certificate within the statutory period. The penalties for default fall here.
The board. Acts for the company in deciding whether to register, and in a private company may have a discretion the articles confer on it.
The frequent mistake is the transferee assuming this is the seller job because the seller is the one giving something up. It is not. The transferee signs, the transferee appeals a refusal, and in practice the transferee is the party with most to lose from a file that is not properly done.
Four documents, in this order, and the order is deliberate because each can stop the next being necessary.
The incorporation and current status of the company, to establish whether it is a private company, whether it is a small company on the current thresholds, and whether it is a holding or subsidiary company. That single determination decides whether a physical instrument is even the right mechanism, and the next group of sections is about nothing else.
The articles of association as currently in force, which means the amended version rather than the one filed at incorporation, for whatever restrictions sit in them. The register of members, for what the transferor actually holds and whether the record is current. And any shareholders agreement, which may impose obligations the articles do not.
Only then the commercial facts: who, to whom, how many, at what consideration. Clients find this order frustrating, because the commercial facts are the ones they came in with. But three of the four documents above can change what is possible, and two of them can make the whole transaction a different transaction.
Four documents, in this order. The company status, which decides whether a physical instrument applies at all. The current articles, not the ones filed at incorporation. The register of members. Any shareholders agreement. The commercial facts come fifth, however much they are what the client arrived with.
For most of the life of the Companies Act, 2013 the first question on a private company share transfer was how to complete the instrument. Since October 2023 it has not been. The first question is whether your company is permitted to have shares in physical form at all.
If it is not, there is no instrument of transfer, no stamp to buy and nothing to deliver within sixty days. The shares move by instruction to a depository participant and the mechanics are entirely different. Everything written about completing the form, in every article published before that date and a good many published since, simply does not apply.
If it is, the physical mechanism remains exactly as it was and the rest of this page describes it.
Getting this wrong in either direction wastes real money. A company outside the rule that dematerialises unnecessarily has taken on a cost and an ongoing filing obligation it did not need. A company inside the rule that executes and stamps a physical instrument has bought a stamp for a document that cannot be acted on.
Do not buy a stamp before answering this. A company inside the demat rule that executes and stamps a physical instrument has paid duty on a document that cannot be acted on. A company outside it that dematerialises unnecessarily has taken on a cost and a recurring filing it never needed.
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Rule 9B was inserted into the Companies (Prospectus and Allotment of Securities) Rules, 2014 by a Ministry of Corporate Affairs notification dated 27 October 2023. It requires every private company other than a small company to issue securities only in dematerialised form and to facilitate the dematerialisation of its existing securities.
Two further obligations sit on the holder rather than the company, and they are the ones that bite on a transaction. A holder of securities in such a company must have them dematerialised before transferring them. And a holder must have the existing holding in demat form before subscribing to or receiving any further securities, whether by private placement, bonus issue or rights offer.
Read that first one again, because it is doing the work. It is not merely that the company should move to demat in due course. It is that an individual holder cannot transfer until their own holding is dematerialised. A seller in a hurry who has not done it is not ready to sell, whatever has been agreed.
The rule is framed by exclusion rather than inclusion, which is why it is easy to misread. It applies to private companies. It takes out small companies. Government companies are also outside it. Producer companies are given a longer period of their own.
So the question for any particular company is a negative one: are we a private company that is not a small company. Public companies were already under a separate requirement. One-person companies and ordinary small private companies were left where they were.
What that produced, in practice, was a sorting exercise across every private company in the country against a definition sitting in a different place in the Act, which most directors had never had occasion to look at. And because the sorting depended on a definition rather than a list, anything that moved the definition moved the population caught by the rule.
The original compliance date was 30 September 2024. It was extended to 30 June 2025 by a notification dated 12 February 2025, which is the date most people who followed the subject will remember.
That date has passed. Which means a company that was inside the rule as the thresholds then stood should already hold its securities in dematerialised form, and the question today is not whether to prepare for it but whether it was done.
A company inside the rule that did nothing is in default, and the ordinary consequence of a default for which no specific penalty is provided is section 450: ten thousand rupees, with a further thousand rupees for each day a continuing contravention lasts, subject to caps. That is not the kind of exposure that ends a business, but it accrues quietly and it surfaces at diligence.
The more immediate practical consequence is the transfer in front of you. A holder in a company that should be in demat and is not cannot simply execute a physical instrument and carry on, and a board registering such a transfer is compounding the position rather than resolving it.
A holder in a company that should be in demat and is not cannot simply execute a physical form and carry on. A board registering such a transfer compounds the position rather than resolving it.
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Everything above depends on one definition, and that definition has been moved three times.
It began modestly. In September 2022 the thresholds were raised to paid-up share capital not exceeding four crore rupees and turnover not exceeding forty crore rupees, and that is the version in force when rule 9B was made and when its deadlines were set. Everybody who worked out their position during 2024 worked it out against those numbers.
Then it moved again, and the effect on rule 9B was not what most readers of the amendment were thinking about. Because the rule carves out small companies by reference to the definition rather than by stating its own thresholds, raising the definition shrinks the population the rule catches. No amendment was made to rule 9B at all.
That is an unusual way for a compliance obligation to disappear, and it is why companies are still being advised to dematerialise when they no longer have to.
With effect from 1 December 2025, the Companies (Specification of Definition Details) Amendment Rules, 2025 raised the thresholds in section 2(85). A small company is now one whose paid-up share capital does not exceed ten crore rupees and whose turnover does not exceed one hundred crore rupees.
The jump is substantial: from four crore to ten crore on capital, and from forty crore to one hundred crore on turnover. Both tests must still be satisfied; failing either takes a company out.
And the exclusions are unchanged and absolute. A public company can never be a small company. Nor can a company registered under section 8. Nor can a holding company or a subsidiary company, whatever its size. That last one catches more people than the thresholds do, because group structures are common and a tiny subsidiary of a tiny holding company is still outside the definition.
| Period | Paid-up capital | Turnover |
|---|---|---|
| 15 September 2022 to 30 November 2025 | Not exceeding ₹4 crore | Not exceeding ₹40 crore |
| From 1 December 2025 | Not exceeding ₹10 crore | Not exceeding ₹100 crore |
A company with paid-up capital of one crore and turnover of forty-six crore was not a small company in 2024 and is one today. That company was inside rule 9B and is now outside it, without doing anything.
For small companies on the current thresholds, yes, and nothing about the physical mechanism has changed. For private companies above those thresholds, no, assuming the rule has been complied with.
There is a third category worth naming, because it is where the awkward conversations happen: a company that was above the old thresholds, did not dematerialise by 30 June 2025, and is below the new thresholds today. It was in default and is now outside the rule. Whether anything turns on the period of default is a question for a company secretary, and it is not a reason to avoid asking it.
The honest position for any specific company is that this must be worked out from audited figures rather than from recollection, written down, and kept on the file. Paid-up capital and turnover are both in the accounts. The holding or subsidiary question is answered from the shareholding. It takes twenty minutes and it determines the entire shape of the transaction.
Three positions a company can be in. Small company on the current thresholds — the physical instrument is the mechanism and nothing has changed. Above the thresholds and compliant — the shares are in demat and there is no form. Above the old thresholds, never dematerialised, below the new ones today — outside the rule now, with a question about the period in between for a company secretary.
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Five things, before a word of the instrument is drafted, and each is recorded in writing on the file with its source.
Paid-up share capital, from the latest audited balance sheet rather than from the authorised capital, which is a different number people frequently quote by mistake.
Turnover, from the same accounts, for the relevant financial year.
Whether the company is a holding or subsidiary company, from the shareholding, because that disqualifies it from being a small company regardless of size.
Whether it is a section 8 company or a public company, either of which answers the question immediately.
Whether any dematerialisation has in fact been done, because the legal position and the actual position are not always the same.
Where a company is close to a threshold, or has crossed one between years, this needs a company secretary rather than a documentation service, and we say so. Where it is plainly on one side, the answer is quick and the transaction proceeds. Keeping the determination on file matters, because the next person to ask the question should not have to start again.
Assuming the physical route applies, section 56(1) is the whole of the requirement and it repays close reading, because every element of it is a thing that can be got wrong.
A company shall not register a transfer of securities, other than a transfer between persons both of whose names are entered as beneficial owners in the records of a depository, unless a proper instrument of transfer in the prescribed form, duly stamped, dated and executed by or on behalf of the transferor and the transferee and specifying the name, address and occupation, if any, of the transferee, has been delivered to the company by the transferor or the transferee within sixty days from the date of execution, along with the certificate relating to the securities, or, if no such certificate is in existence, along with the letter of allotment.
Count the conditions. Prescribed form. Duly stamped. Dated. Executed by or on behalf of both parties. Transferee details specified. Delivered to the company. Within sixty days of execution. With the certificate or the letter of allotment. Eight requirements in one sentence, and a failure on any of them means the company shall not register the transfer.
Section 56(1), the eight conditions. Prescribed form · duly stamped · dated · executed by or on behalf of both parties · transferee name, address and occupation specified · delivered to the company · within sixty days of execution · with the certificate or letter of allotment. A failure on any one means the company shall not register.
The prescribed form is short and it asks for less than people expect, which is itself a source of error because the blanks get filled casually.
It wants the company name and the CIN. The class of securities and the number being transferred, in figures and in words. The distinctive numbers, and the certificate number and folio against which they stand. The consideration. The transferor full name and folio. The transferee full name, father or spouse name, address, email, occupation and the existing folio if there is one. The signatures of both parties with witnesses.
The item that causes the most trouble is the distinctive numbers, because they have to match what the register records, and in a company whose register is not current they frequently do not. The second is occupation, which the section specifically requires and which people leave blank because it feels irrelevant. It is a statutory particular.
We complete the form against the register rather than against the certificate, for the reason given earlier: the certificate shows what was true when it was issued.
Two blanks cause most of the trouble. The distinctive numbers, which must match the register and frequently do not in a company whose register is stale. And occupation, which the section expressly requires and which people leave empty because it feels irrelevant.
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The section requires execution by or on behalf of the transferor and the transferee. Both. This is the defect we see more often than any other, and it has an entirely understandable cause: the seller is the one giving something up, so the seller signs, and the form goes off.
A form signed only by the transferor is not a proper instrument of transfer. The company should not register on it, and a company that does has not complied with the section.
The words by or on behalf of also matter. Somebody may sign for another, under a power of attorney or as an authorised signatory of a corporate holder. Where that happens, the authority should be identified and a copy kept with the instrument. A signature by an attorney with nothing on the file to show the attorney could sign is an invitation to a question years later, when the attorney is unavailable and the transaction is being examined by somebody with an interest in finding a defect.
The sixty days runs from the date of execution. Not from the agreement, not from payment, not from the board meeting, not from the date somebody got round to posting the form.
This sounds obvious and is routinely got wrong, because of how transactions actually happen. The parties meet and sign. Payment is to come in a few days, so nobody sends the form yet. The money takes longer than expected. The buyer is travelling. A month passes, then another. The form is handed over in week ten, and by then it is outside the period.
There is also a worse version of this, and it should be named. Somebody notices the problem and suggests simply writing a later date on the form. That is backdating in reverse and it is a false statement on a statutory instrument. We will not do it, and anybody who offers to is proposing something that will look very bad indeed if the transfer is ever examined.
Do not re-date the form to fix a late delivery. The statute provides an honest route for exactly that situation, described two sections below. Changing the date on an executed instrument is a false statement, and it is discoverable.
Delivery means to the company, and it may be made by either the transferor or the transferee. That second point is useful: if one side is dragging, the other can deliver.
What the company receives is the executed, stamped and dated instrument, together with the share certificate relating to the securities or, where no certificate exists, the letter of allotment. The certificate is part of the delivery and not an afterthought, which is covered in its own section below.
Record the date of delivery. We put it on a covering note and keep an acknowledged copy, because two different periods run from two different dates and both of them matter later: the sixty days runs from execution, and the company one month to issue the new certificate runs from receipt. A file that does not record both dates cannot later show that either was met.
Record two dates, not one. The date of execution, from which the sixty days runs, and the date of delivery to the company, from which the company one month to issue the certificate runs. A file missing either cannot later show that the period was met.
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The transfer is not void and the transaction is not lost. But the company is in a different position: section 56(1) tells it not to register unless the conditions are met, and one of them has not been.
What the company must not do is register anyway and say nothing, which is what tends to happen where nobody is watching the dates. That leaves a transfer on the register that was made in the face of a statutory prohibition, and it sits in the company records indefinitely.
What it should do is use the route the statute provides for exactly this, which is the proviso. That requires the board to apply its mind and usually to take an indemnity, and it produces a minute recording why the transfer was registered out of time. That minute is the difference between a documented exception and an unexplained irregularity.
The proviso to section 56(1) covers two situations together: where the instrument of transfer has been lost, and where it has not been delivered within the prescribed period. In either case the company may register the transfer on such terms as to indemnity as the Board may think fit.
Three features of that are worth noting. It is permissive: the company may register, not must. The terms are for the Board, which means there is no prescribed form of indemnity and the board can require what it reasonably thinks necessary. And the indemnity is the price of the accommodation, protecting the company against a claim arising from having registered on a defective or absent instrument.
In practice an indemnity bond from the party seeking registration, supported by a board resolution recording the circumstances, is what this looks like. It is a normal thing to do and not an admission of wrongdoing. What it is not is a formality to be waved through: a board that records no reasons has used a provision that requires it to think.
The proviso is a board decision, not a rubber stamp. It says the company may register, on such terms as to indemnity as the Board thinks fit. A board that records no reasons has used a provision that required it to think.
The instrument alone is not the delivery. Section 56(1) requires the certificate relating to the securities to go with it, or, where no certificate is in existence, the letter of allotment.
The practical difficulty is that private company share certificates go missing with remarkable regularity. They were issued once, years ago, handed to a shareholder who put them somewhere safe, and nobody has needed them since. On a transfer they are suddenly needed and cannot be found.
That is not a dead end, but it is a separate exercise: the company issues a duplicate, on an indemnity and after whatever the articles and the board require, and that happens before the transfer rather than alongside it. Where a certificate is produced but its condition or particulars raise a question, confirming it against the register is a document verification step worth taking before anything is executed.
Ask for the certificate at the start, not at the delivery stage. If it cannot be found, a duplicate has to be issued first, and that is its own process with its own board step. Discovering it on the day of delivery costs weeks.
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Section 56(3) deals with a situation that is uncommon but catches people entirely by surprise when it arises. Where the application for registration is made by the transferor alone, and relates to partly paid shares, the transfer shall not be registered unless the company gives notice of the application to the transferee and the transferee gives no objection within two weeks of receiving it.
The logic is protective. A partly paid share carries a liability: the holder can be called on for the unpaid amount. Registering somebody as the holder of such a share without their confirmation would be fastening a liability onto them, so the Act requires that they be told and given a fortnight to say no.
Most private company shares are fully paid and the provision never arises. Where shares were allotted and the full amount was never called or never actually received, it does, and it is one of the things a look at the register and the allotment records turns up. If your company has partly paid shares on its register and nobody realised, that is worth knowing for reasons well beyond this transfer.
Stamp duty is charged on documents, not on transactions. That single idea explains most of what follows and most of what confuses people about it.
It is why a transfer effected by an instrument attracts duty and a transmission by operation of law does not: there is no instrument in the second case. It is why an oral agreement to sell shares attracts nothing, while the form executed to give effect to it does. And it is why the duty attaches when the instrument is executed rather than when the money moves or when the board registers.
Section 56(1) requires the instrument to be duly stamped, so this is not merely a revenue obligation sitting alongside the transfer. It is one of the conditions of registrability. An unstamped instrument is not a proper instrument for the purposes of the section, which means the stamp is part of the transfer rather than an expense attached to it.
Before July 2020 the position varied, and old material still circulating reflects that variation. The amendments to the Indian Stamp Act, 1899 that took effect on 1 July 2020 produced a uniform national rate, which is one of the genuinely simplifying changes in this area.
For a delivery-based transfer of a security other than a debenture, the rate is 0.015 per cent. That is fifteen rupees on every one lakh of consideration. On a transfer at a consideration of fifty lakh rupees, the duty is seven hundred and fifty rupees.
It is worth pausing on how small that is, because people routinely expect a figure an order of magnitude larger and occasionally pay one. The duty on a share transfer is not a significant transaction cost. What is significant is getting it wrong, because an unstamped or wrongly stamped instrument is not registrable and the error is cheap to make and awkward to unwind.
The 2020 framework draws a line between two routes. Where an instrument is executed through a stock exchange or a depository, the duty is collected by the exchange, the depository or the registrar and transfer agent. Where a transfer is made otherwise than through a stock exchange or depository, which is every ordinary private company transfer on a physical instrument, section 9B applies.
Under that provision the duty is payable by the transferor, on the consideration stated in the instrument. That is the statutory liability and it does not move.
What the parties agree between themselves is a different question. It is entirely common for a buyer to agree to bear the duty, and there is nothing wrong with that; it is a private allocation of a cost. But it does not transfer the liability, and on a file it is worth recording who actually paid so that the position is clear if anybody asks later.
On the consideration stated in the instrument. Which raises the obvious question about transfers where the consideration is nominal, or absent, or where the parties have agreed a figure that bears no relation to what the shares are worth.
This is where a documentation service has to be careful about what it is and is not saying. We take the consideration the parties give us and we compute the duty on it. We do not test whether the figure is right, we do not advise that it is defensible, and we say in writing that it has been taken as given.
The reason for that boundary is that the same figure drives other things entirely: the income tax position of both parties, and where any party is non-resident, the exchange control position. Those consequences are real, they are sometimes substantial, and they belong to a registered valuer and a chartered accountant. A consideration that has been chosen to produce a convenient stamp figure is a problem waiting in a different department.
The same figure does three jobs. It fixes the stamp, the seller capital gains position, and — where anybody is non-resident — the exchange control pricing position. A consideration chosen to produce a convenient stamp figure creates a problem in a different department.
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The rate is national; the mechanics are not. Depending on the State and on what the relevant office is currently issuing, duty on a transfer instrument may be paid by affixing share transfer adhesive stamps, by franking, or through an e-stamping system.
In Delhi, share transfer stamps are recognised under the Delhi Province Stamp Rules, 1934, and an e-stamping facility also operates. Which of those is practically available on a given day at a given counter is a question of fact rather than of law.
The error worth guarding against is category rather than amount. Stamp paper or an e-stamp certificate issued under a share certificate category, or under a general agreement category, is not duty paid on a transfer instrument. People buy the wrong category because the counter offers something that sounds close enough, and the money is then spent on the wrong document.
So the practical instruction is short: confirm the category before buying, and keep the proof of payment with the instrument rather than loose.
Confirm the category before buying anything. An e-stamp or stamp paper issued under a share certificate or general agreement category is not duty paid on a transfer instrument. The error is in the category, not the amount, and the money is simply spent on the wrong document.
Because duty attaches to the instrument, and a transmission happens by operation of law without one, a transmission carries no duty of the kind described here.
That has a practical consequence worth stating plainly, because it occasionally tempts people. Where shares are coming to somebody on a death, that is transmission, and it is dealt with by evidence of entitlement rather than by an executed transfer form. Documenting it as a transfer from the deceased holder would be inaccurate on its face, since a deceased person cannot execute an instrument, and section 56(5) addresses the related but different case of a legal representative executing a transfer.
The right course is to document what actually happened. Where a shareholder has died, the company is dealing with a transmission and should ask for what it requires to satisfy itself of entitlement. Where the legal representative is then transferring the shares onward, that onward transfer is an ordinary transfer with an ordinary instrument and ordinary duty.
Shares given rather than sold still move by instrument, and every requirement in section 56(1) applies unchanged. The form is executed by both sides, it is dated, it is delivered within sixty days with the certificate, and the board registers it. The absence of money changes none of the machinery.
What it does change is everything around the machinery. A nil or nominal consideration raises a question about the stamp computation, since the duty is charged on the consideration stated. It raises income tax questions for the recipient, with exemptions that depend on the relationship between the parties. And within a family it raises the question of whether the transaction is really a gift or really something else.
None of those are questions this page answers, and none of them are questions a documentation file should assume answers to. What we will do is prepare the instrument for a transaction the parties have described as a gift, record the consideration as what they have told us it is, and tell them in writing that the tax treatment of a gift of shares needs advice before and not after.
Family gifts of shares are more complicated on paper than arm length sales. The mechanics are identical; the tax and stamp questions around a nil consideration are not. Get that advice before the form is executed, because the executed form states the consideration.
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An instrument that is not duly stamped fails one of the express conditions in section 56(1), so the company is told not to register on it. That is the immediate consequence.
The longer consequence is evidentiary and it lands on the transferee. An instrument that was never properly stamped is a weak document to produce years later when somebody is questioning how the shares came to be held. The defect does not heal with time, and the person who needs the document is the person who bought the shares.
Where a company has registered a transfer on an unstamped instrument, which happens, the register entry is not undone by the defect but the company records carry an irregularity. This is one of the things that surfaces in diligence, and the answer "it was years ago and nobody minded" is not a satisfying one to give a buyer.
Given that the duty on most private transfers is a few hundred rupees, the economics of getting this right are not finely balanced.
The defect does not heal with time, and it lands on the buyer. An instrument that was never properly stamped is a weak document to produce years later, at the moment somebody is questioning how the shares came to be held.
We do not value shares, and the refusal is firm rather than cautious.
The consideration on a share transfer is the number that drives the stamp duty, the capital gains position of the seller, the position of the buyer where shares are acquired below fair value, and, where a non-resident is on either side, the exchange control position including the pricing requirements that attach to it. A figure chosen casually can have consequences in three directions at once.
That work belongs to a registered valuer, and the tax analysis to a chartered accountant. Where a transaction needs a valuation it needs it before the instrument is drafted, because the instrument states the consideration and the consideration is the output of the valuation rather than an input to it.
What we put on the file is a line recording that the consideration has been supplied by the parties and taken as given. That line exists so that nobody can later suggest our document supported a figure we never examined.
A transfer is registered by the company, and in practice that means the board considering the instrument and resolving to register it. The resolution is not a formality: it is the record of the company having applied its mind, and it is what the register entry rests on.
A usable resolution records the date of the meeting, that the instrument was placed before the board, the names of the transferor and transferee, the number and class of shares and their distinctive numbers, the date of execution and the date of receipt by the company, that the instrument was found to be in order and duly stamped, and the direction to make the entry and issue the certificate.
That list reads as tedious and it takes four lines to write. Its value is that it answers, on its face, every question a person examining the transaction two years later will have. A resolution that says only that a transfer was approved answers none of them. We draft it as part of the file for exactly that reason, and the same discipline applies to the company other board resolutions.
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A private company board can decline to register a transfer. This is a real power and it is one of the substantive differences between a private and a public company.
Where it comes from matters. The power is not an inherent discretion to do as the board pleases; it comes from the articles, which section 44 makes the source of the manner in which shares are transferable. Articles commonly give the board a discretion to refuse, sometimes an absolute one, sometimes one confined to stated grounds.
What the board cannot do is exercise it carelessly. The statute attaches a procedure to a refusal, and a refusal that ignores the procedure is weak if challenged. The two things most likely to be in issue later are whether the articles actually gave the power relied on, and whether the reasons given were reasons at all.
For the person on the other side of a refusal, the first question is therefore the same: what do the articles say, and what did the notice say.
The power comes from the articles, not from the board. Section 44 makes shares transferable in the manner the articles provide, so the first question on any refusal — from either side — is what the articles actually say.
Section 58(1) provides that where a private company limited by shares refuses to register the transfer of, or the transmission of the right to, any securities or interest of a member in the company, it shall send notice of the refusal to the transferor and the transferee, or to the person giving intimation of the transmission, within a period of thirty days from the date on which the instrument of transfer or the intimation of transmission was delivered to the company.
Three elements. Notice to both sides, not just to the person who lodged it. Within thirty days. Running from delivery to the company, which is the same date the file should already have recorded.
A company that simply does nothing has not avoided the question. It has failed to send a notice it was required to send, and the consequence appears in the appeal provision: where no notice was sent, the appeal period for the transferee is longer and runs from delivery rather than from receipt of a notice. Silence buys the company nothing and costs it the shorter limitation period.
The notice must carry reasons. The section says so in terms, and this is the part most often treated as optional.
The purpose is straightforward. A transferee considering whether to appeal needs to know what they are appealing against. A Tribunal asked to review a refusal needs to know what the refusal was based on. And a board that has to articulate its reasons is, in the ordinary course, a board that has thought about them.
A notice saying that the board has resolved not to register the transfer is not a notice with reasons. Nor is a notice reciting that the board exercised its discretion under article such-and-such, without saying why. Reasons mean the actual grounds: that the transfer breaches a pre-emption right that was not followed, that the instrument was defective in a stated way, that the transferee falls within a category the articles exclude.
For a company, giving real reasons is the cheapest protection available. For a transferee, receiving a notice without them is useful information about how the refusal will look on appeal.
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Everything above about board discretion is a private company story. Section 58(2) provides that the securities or other interest of any member in a public company shall be freely transferable.
That is a different starting position altogether. A public company is not choosing its members, and it cannot decline a transferee because it would prefer somebody else. The appeal provision for public companies, in section 58(4), is framed around a refusal without sufficient cause, which tells you what the expected position is: registration, unless there is a reason.
The periods differ too. Where a public company refuses without sufficient cause to register a transfer within thirty days of delivery, the transferee may appeal within sixty days of the refusal, or, where no intimation was received from the company, within ninety days of delivery.
Most readers of this page are dealing with private companies, and the private company position is the one described throughout. The contrast is set out because people hear that shares are freely transferable, apply it to a private company, and are surprised by a refusal that was entirely lawful.
| Private company | Public company | |
|---|---|---|
| Starting position | Transfer in the manner the articles provide; board may have a discretion | Securities freely transferable (s.58(2)) |
| Notice of refusal | Within 30 days of delivery, with reasons | Refusal without sufficient cause within 30 days of delivery |
| Appeal period | 30 days from receipt of notice, or 60 days from delivery if none | 60 days from the refusal, or 90 days from delivery if nothing came back |
The second limb of section 58(2) is the interesting one and it is easy to miss. It keeps alive, as a matter of contract, whatever two or more people have agreed between themselves about transferring securities.
That sentence does real work. Free transferability is about the company relationship with its members: the company cannot block a transfer. It is not about the members relationship with each other. Two shareholders in a public company who have agreed between themselves to restrict transfers have made a contract, and that contract is enforceable between them as a contract.
So a restriction in a shareholders agreement is not wiped out by free transferability; it simply does not bind the company. A member who transfers in breach of it has made a valid transfer that the company must register, and has also breached a contract, with whatever consequences the contract provides.
The practical lesson for anybody negotiating a shareholders agreement is that there are two different questions: what the company must do, and what the parties have promised each other. They can have different answers.
A refusal is not the end of the matter. Section 58(3) gives the transferee a right of appeal to the Tribunal, and that is a genuine remedy rather than a theoretical one.
It is worth being clear about what changes at this point. An appeal to the Tribunal is litigation. It has a limitation period that does not forgive delay, it requires a properly drafted petition, and it is conducted by counsel or by a company secretary with rights of appearance. Nothing about it is documentation work, and the file we prepare stops here and is handed over.
The thing that most often determines how such an appeal goes is what happened earlier: whether the instrument was in order, whether the articles actually supported the refusal, whether reasons were given, and whether the dates were recorded. A transferee with a clean file and a reasonless refusal notice is in a materially better position than one without.
Which period applies depends on what the company did, and the structure rewards the transferee when the company has been silent.
Where the company sent a notice of refusal, the appeal must be made within thirty days of receipt of that notice. Where the company sent no notice at all, the transferee has sixty days from the date on which the instrument of transfer or the intimation of transmission was delivered to the company.
Notice the design. A company that complies and tells the transferee why starts a short clock. A company that says nothing gives the transferee twice as long, running from a date the transferee can prove. The provision does not reward silence.
For anybody in this position the practical step is the same on day one: establish the date of delivery to the company and the date any notice was received, in writing, before anything else. Those two dates determine which period applies and when it ends, and reconstructing them later is the commonest reason an appeal has a problem it did not need.
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Section 58(5) sets out the powers, and they are wider than simply allowing or refusing the appeal.
After hearing the parties, the Tribunal may dismiss the appeal. Or it may direct that the transfer or transmission shall be registered by the company, and the company is then to comply with the direction within ten days of receiving the order. Or it may direct rectification of the register and also direct the company to pay damages, if any, sustained by any party aggrieved.
Two things there are worth noticing. The ten day compliance period is short and specific, which tells you the Tribunal order is meant to be acted on rather than discussed. And the damages power means a refusal that was wrong can cost the company more than the registration it was resisting.
Section 58(6) adds a serious consequence for not complying: contravention of a Tribunal order under the section is punishable with imprisonment of one to three years and a fine of one lakh to five lakh rupees. That is not a provision a board should discover after the event.
Ten days to comply, and damages are available. A refusal that turns out to be wrong can cost the company more than the registration it was resisting, and contravening the order carries a minimum term of imprisonment under section 58(6).
Once the transfer is registered, the company must deliver the certificate. Section 56(4)(c) gives it one month from the date of receipt by the company of the instrument of transfer, or of the intimation of transmission.
Read the trigger carefully, because it is not what people assume. The month runs from receipt of the instrument, not from the board meeting at which the transfer was registered. A company that sits on an instrument for three weeks before putting it to a board has used three of its four weeks.
The same sub-section sets the other periods in one place: two months from incorporation for certificates to subscribers to the memorandum, two months from allotment for any allotment of shares, and six months from allotment for debentures. Where securities are held with a depository, the company instead informs the depository of the allotment particulars.
These are among the most widely missed deadlines in private company practice, and they are missed because nobody is counting.
The entry is the point of the whole exercise, and it is the step most likely to be left for later.
Both the register of members and the register of transfers should be written up as part of the same sitting that approves the transfer, not in a catch-up exercise before an audit. The entry records the transferee details, the number and class of shares and their distinctive numbers, the date of the transfer and the date of entry, and the corresponding reduction against the transferor holding.
Where a transferor is transferring part of a holding, the certificate is split and new certificates issue for both parts, and the distinctive numbers have to be allocated correctly between them. That allocation is a small piece of arithmetic that produces years of confusion if it is done loosely.
Maintaining these registers properly over time is its own discipline, and it is covered on our page on statutory registers and minutes. The relevance here is narrow and absolute: a transfer that is not entered has not been completed.
Write both registers up in the same sitting that approves the transfer. The register of members and the register of transfers, with the distinctive numbers allocated correctly where a holding is being split. Left for later, it is left for an audit.
A transfer during the year shows up in the company annual return, which records the shareholding and changes in it during the period. That is a filing rather than a step in the transfer, and it happens on the ordinary annual cycle.
It is mentioned here for one reason: it is the point at which a discrepancy becomes public. A register that does not match what is filed, or a filing that shows a shareholding nobody can trace to a registered transfer, is visible to anybody who looks at the company master data. Diligence exercises frequently start there, because it is the cheapest place to look.
So the annual return is a reason to keep the register current rather than a separate obligation arising from a transfer. The annual filing work itself sits with a company secretary.
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Where the register is wrong, there is a statutory route to putting it right, and it is a Tribunal proceeding rather than something a company can simply decide to do.
Section 59(1) applies where the name of any person is, without sufficient cause, entered in the register of members, or, after having been entered, is omitted from it, or where default is made or unnecessary delay takes place in entering in the register the fact of any person having become or ceased to be a member.
Those three limbs cover most of what actually goes wrong: somebody on the register who should not be, somebody removed who should not have been, and somebody whose change in status was never recorded at all. The third is the quiet one, and it is the one that accumulates in a company whose registers are not maintained.
The three limbs of section 59(1). A name entered without sufficient cause. A name entered and then omitted. Or default or unnecessary delay in entering that somebody became or ceased to be a member. The third is the quiet one, and it is what accumulates in an unmaintained register.
The appeal may be made by the person aggrieved, by any member of the company, or by the company itself. That is a wide class and the width is deliberate.
A person whose name has been wrongly entered or omitted is the obvious applicant. Any member may apply, which allows a shareholder to challenge an entry affecting the register even though it is not their own holding at stake. And the company may apply, which matters where a company has discovered an error in its own records and wants it corrected authoritatively rather than by quietly rewriting the book.
That last route is worth knowing about. A company that finds a mistake and simply alters the register has created a second problem on top of the first, because there is now an unexplained alteration in a statutory record. Where the position is genuinely unclear, the company can have it resolved.
Section 59(2) gives the Tribunal power to dismiss the appeal or to direct registration or rectification within ten days, together with damages. Section 59(3) preserves the right of a security holder to transfer and the voting rights of an acquirer, unless suspended by order.
A company can apply against its own register. Where a company finds an error and simply rewrites the book, it has created a second problem on top of the first: an unexplained alteration in a statutory record. Where the position is genuinely unclear, have it resolved.
Not every error needs a Tribunal, and it would be unhelpful to suggest otherwise. There is a real distinction between a register that is incomplete and a register that is wrong.
Incomplete means transactions happened, everybody agrees they happened, the instruments and board minutes exist, and nobody wrote the entries up. That is a bookkeeping failure and it is corrected by doing the work: assembling the instruments and resolutions in date order and writing the register up to date, with the entries reflecting what the documents show.
Wrong means the register says something that is disputed, or that cannot be supported by any instrument, or that somebody affected does not accept. That is not a bookkeeping exercise, because correcting it means deciding whose version is right, and a company deciding that about its own register is not in a comfortable position.
The first is work we can help assemble; the second is section 59. Being honest about which one you are in, at the start, saves a great deal.
Incomplete is not the same as disputed. A register nobody wrote up is fixed by writing it up from the underlying documents. A register somebody disagrees with is fixed by the Tribunal. Decide which you have before you start writing.
They are not severe in isolation, and the risk they represent is cumulative and reputational rather than existential. But they are real, and they fall on the company and on its officers rather than on the parties to the transfer.
Section 56(6) provides that where there is a default in complying with any of sub-sections (1) to (5), the company and every officer in default are liable to a penalty of fifty thousand rupees. That sub-section was substituted with effect from 21 December 2020, converting what had been a wider range into a flat figure.
Note the scope. Sub-sections (1) to (5) include registering on a defective instrument, missing the certificate periods, and failing to deal properly with partly paid shares. It is not confined to any one failure.
Officer in default is a defined expression and it is wider than people assume. It is not limited to a managing director or to whoever happened to sign something; it reaches directors who are aware of a contravention and do not act against it. On a small private company board that is frequently everybody, which is a reason for a director who is uneasy about how a transfer is being handled to have the unease minuted rather than expressed in the corridor.
The realistic exposure, though, is rarely the penalty itself. It is what a pattern of unmet requirements says to the next person who looks: an investor in diligence, a lender taking security, a buyer of the business. A fifty thousand rupee penalty is survivable. A finding that the company registers transfers on defective instruments and issues certificates when it gets round to it changes the terms of whatever is being negotiated, and it is discovered at precisely the moment the company has least room to argue about it.
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Two different penalty provisions can be in play on the same facts, and they work differently.
Section 56(6) is specific: a flat fifty thousand rupees on the company and on every officer in default, for a default under sub-sections (1) to (5). It does not escalate with time.
Section 450 is the residual provision, applying where a contravention has no penalty specifically provided. It carries ten thousand rupees, and where the contravention is a continuing one, a further one thousand rupees for every day it continues, subject to a cap of two lakh rupees for a company and fifty thousand rupees for an officer in default or any other person. The dematerialisation and half-yearly filing obligations described earlier fall here rather than under section 56.
The difference matters for how exposure builds. A flat penalty is a known number. A daily accrual on a continuing default is not, and an obligation that has been quietly unmet for two years can reach its cap without anybody noticing. That is the shape of the exposure on a company that never dematerialised and never filed.
The penalties above are for getting the process wrong. Disobeying a Tribunal order is treated as a different order of seriousness, and the provisions say so plainly.
Under section 58(6), where a person contravenes an order of the Tribunal under that section, the punishment is imprisonment for a term of not less than one year and up to three years, together with a fine of not less than one lakh rupees and up to five lakh rupees.
Under section 59(5), where a company fails to comply with an order of the Tribunal under that section, the company is punishable with a fine of not less than one lakh and up to five lakh rupees, and every officer in default with imprisonment of up to one year, or a fine of not less than one lakh and up to three lakh rupees, or both.
These sit at the end of a long road and almost nobody reaches them. They are set out because the existence of a minimum term of imprisonment at the end of the road is a useful thing for a board to know while it is deciding how carefully to handle a refusal at the beginning of it.
Things that sit around a share transfer file. The company itself, where one is being set up rather than changed hands — private limited registration. Founders dividing equity at the start, which is a co-founder agreement rather than a transfer, and option grants to staff, which are ESOP documentation and move no existing shares at all. Where new shares are to be issued rather than moved, the ceiling may need lifting first: an authorised capital increase. A joint venture agreement where two companies are coming together around a shareholding. A company name change, which alters nothing about who holds what but does change every document that names the company. DIR-3 KYC for directors and a current digital signature, both of which stall filings when they lapse. Keeping a growing set of corporate papers navigable is legal file management, and winding a company up at the other end is a strike off. The transfer work itself is the share transfer documentation service on this page.
Our output is the file that makes a transfer registrable without the board having to ask a single question. It is a short list and every item exists because its absence stalls something.
The instrument in the prescribed form, completed for the actual holding, with the distinctive numbers and the folio as the register records them rather than as the parties remember them.
The execution block set out so that both sides sign, with witness details and, where anybody signs on behalf of another, the authority identified.
The stamp computation, showing the consideration taken and the rate applied, so the figure can be checked rather than accepted.
The board paperwork — a board resolution drafted to record registration, the transferor and transferee, the number of shares and the date.
The register entries drafted for the register of members and the register of transfers, ready to be written up rather than reconstructed later.
A dated covering note recording when the instrument was executed, when it was delivered to the company, and the two dates that run from each.
Where the shares are in demat, there is no instrument for us to draft and the work changes shape entirely: the file becomes the instruction to the depository participant, the confirmation that the holding matches, and the board and register work that still has to happen afterwards.
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We do not value the shares. A share transfer at a stated consideration carries income tax and, where a non-resident is involved, exchange control consequences, and the consideration is the number those consequences turn on. That figure belongs to a valuer and to your chartered accountant, and nothing we produce should be read as supporting it.
We do not advise on whether a transfer is permitted. Articles of association routinely carry pre-emption rights, rights of first refusal, lock-ins and board consent requirements, and a shareholders agreement may carry more. Whether a proposed transfer breaches any of them is a reading of your own constitutional documents against the facts, and it is advice rather than drafting. Where the articles plainly impose a step, we will say so and stop.
We do not deal with the tax side at all, and we do not prepare anything that assumes a tax position. Where a transfer is at less than fair value, or between related parties, or involves a non-resident on either side, there are consequences we are not the people to describe.
Check the articles before the form is filled, not after it is signed. A transfer executed in breach of a pre-emption clause is a problem the stamp has already been paid on, and unwinding it is far more expensive than reading nine pages first.
Three situations move this off our desk, and each of them is better recognised early than discovered late.
The first is a refusal. If the board declines to register, the next step is an appeal to the Tribunal, and that is litigation with its own limitation period. The second is a dispute about what the register already says, because an application for rectification is also a Tribunal proceeding and the pleading matters. The third is any transfer where a regulator is in the picture, whether that is exchange control on a non-resident transfer or a sectoral approval, because the documentation then follows the approval rather than the other way round.
The ongoing secretarial work also sits with a company secretary rather than with us: the half-yearly filing for companies inside the demat rule, the annual return, and keeping the statutory registers current between transactions. We prepare a transfer; we do not run a secretarial department.
Three situations that move this off a documentation desk. A refusal, which becomes a Tribunal appeal with its own limitation. A dispute about what the register already says, which is a rectification petition. And any transfer with a regulator in it — exchange control on a non-resident, or a sectoral approval — where the documentation follows the approval.
A company caught by the dematerialisation rule files a half-yearly reconciliation of share capital audit report in Form PAS-6, within sixty days of the end of each half-year, certified by a company secretary or a chartered accountant in practice. In practice that means due dates of 30 May for the half-year ending 31 March and 29 November for the half-year ending 30 September.
It is worth saying plainly what this is not. It is not a transfer filing. Nothing about a particular share transfer is reported in it, and filing it does not record or validate a transfer. It is a periodic reconciliation between what the company says its capital is and what the depositories hold, and it exists to catch drift between the two.
It appears here for one reason only: the question lands in the same conversation as the transfer. If your company is inside the rule, this is a recurring obligation whether or not any shares move, and it is a company secretary's work rather than part of a transfer file.
PAS-6 is not a transfer filing. It reports nothing about any individual transfer and filing it neither records nor validates one. It is a periodic reconciliation between the company stated capital and what the depositories hold.
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You will not find a valuation methodology here, a table of what shares in a company like yours are worth, or any figure for the tax on a transfer. Those are the three numbers people most want and the three we are least entitled to supply.
You will also not find a State-by-State table of how share transfer stamps are physically obtained. The rate is uniform and we state it. How you actually pay it — adhesive share transfer stamps, franking, or an e-stamping system — is a matter of State practice and of what the counter concerned is currently issuing, and a table of that written today would be wrong somewhere within a year.
Court work is for your advocate, whose fee is engaged and paid by you directly; we do not quote, collect or share it
Our charge for preparing a share transfer file is ₹2,999, and the usual turnaround is 3 – 7 days. It covers checking the company's position on the dematerialisation rule, confirming the holding against the register, drafting the instrument or the depository instruction, the stamp computation, the board resolution, the register entries and the dated covering note.
Outside it are the stamp duty itself, which is paid to the government and not to us. Any valuation. Your chartered accountant's work on the tax side. Depository and participant charges where the shares are in demat. And anything arising if the transfer is refused or disputed.
What you get at the end. The executed instrument or the lodged instruction. The stamp computation in a form that can be re-run. The board resolution and the draft register entries. The covering note with the execution date and the delivery date on it. And, where we found something in the articles that the parties had not noticed, a written note of it.
Where a holder has died rather than sold, none of the machinery on this page applies, and the page has said so in its own terms more than once. That route runs on a nomination if one was recorded, on survivorship if the folio was joint, and otherwise on a threshold that decides whether a court document is needed at all. Our guide to nomination and transmission of shares sets out all four and the documents each one takes.
Open the register of members and read the entry for the transferor. Not the share certificate, not the cap table in a spreadsheet, not what everybody remembers from the last round. The register.
Check three things against it. That the transferor is entered as the holder of at least the number of shares being transferred. That the distinctive numbers you are about to write on the instrument are the ones the register shows. And that no earlier transfer, allotment or transmission has gone unrecorded in the meantime, because a register that stopped being written up two years ago is the single most common reason a transfer cannot be registered when somebody finally needs it.
If the register and the cap table disagree, stop and fix the register first. The register is what the company is required to maintain and what a transfer is entered in; a spreadsheet is a convenience. Reconciling them after a transfer has been executed and stamped is the expensive order to do it in.
Ten minutes, before any money moves. Read the register entry for the transferor, match the distinctive numbers, and confirm nothing since the last entry has gone unrecorded. On a surprising number of private companies that check is the whole of the problem.
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Send the company name, who is transferring to whom and how many shares. You will get the position on the demat rule, the stamp figure and a list of anything in the articles that has to happen first.
The starting point, and the thing people forget. Section 44 of the Companies Act, 2013 provides that the shares, debentures or other interest of any member in a company are movable property, transferable in the manner provided by the articles of association. The statute sets the machinery; the company's own articles set what is permitted, which is why a transfer that satisfies every provision below can still fail on a pre-emption clause nobody read.
The instrument, and the sixty days. Section 56(1) provides that a company shall not register a transfer of securities, other than a transfer between persons both of whose names are entered as beneficial owners in the records of a depository, unless a proper instrument of transfer in the prescribed form, duly stamped, dated and executed by or on behalf of the transferor and the transferee and specifying the name, address and occupation of the transferee, has been delivered to the company within sixty days from the date of execution, along with the certificate relating to the securities or, where no certificate exists, the letter of allotment. The proviso provides that where the instrument has been lost or has not been delivered within the prescribed period, the company may register the transfer on such terms as to indemnity as the Board may think fit. Section 56(2) preserves the company's power to register a transmission of rights by operation of law. Section 56(3) deals with partly paid shares: where the application is made by the transferor alone, the transfer shall not be registered unless the company gives notice to the transferee and the transferee gives no objection within two weeks of receiving it.
When the certificate has to reach you. Section 56(4) requires delivery of certificates, unless prohibited by law or by an order of a court, Tribunal or other authority, within two months from incorporation for subscribers to the memorandum, two months from allotment in the case of any allotment of shares, one month from the date of receipt by the company of the instrument of transfer or of the intimation of transmission, and six months from allotment in the case of debentures. Section 56(5) validates a transfer executed by the legal representative of a deceased holder as if the representative had been the holder at the time of execution. Section 56(6), as substituted with effect from 21 December 2020, provides a penalty of fifty thousand rupees on the company and on every officer in default. Section 56(7) makes a depository or depository participant transferring shares with an intent to defraud liable under section 447.
Refusal, and the appeal. Section 58(1) requires a private company limited by shares which refuses to register a transfer or transmission to send notice of the refusal, with reasons, to the transferor and the transferee, or to the person giving intimation of transmission, within thirty days from the date on which the instrument or the intimation was delivered to the company. Section 58(2) provides that the securities of a member in a public company shall be freely transferable, while preserving the enforceability as a contract of any agreement between two or more persons for the transfer of securities. Section 58(3) gives the transferee an appeal to the Tribunal within thirty days of receipt of the notice, or, where no notice has been sent, within sixty days from the date on which the instrument or intimation was delivered. Section 58(4) deals with a public company refusing without sufficient cause within thirty days, with an appeal within sixty days of the refusal or ninety days from delivery where no intimation came. Section 58(5) empowers the Tribunal, after hearing the parties, to dismiss the appeal, or to direct that the transfer or transmission be registered, the company complying within ten days of receipt of the order, or to direct rectification of the register and payment of damages. Section 58(6) punishes contravention of a Tribunal order with imprisonment of one to three years and a fine of one lakh to five lakh rupees.
Putting the register right. Section 59(1) allows an appeal to the Tribunal where the name of a person is entered in the register of members without sufficient cause, or is omitted, or where default is made or unnecessary delay occurs in entering the fact of a person having become or ceased to be a member; the appeal may be made by the person aggrieved, by any member, or by the company. Section 59(2) empowers the Tribunal to dismiss the appeal or to direct registration or rectification within ten days, and to direct payment of damages. Section 59(3) preserves the right to transfer and the voting rights of an acquirer unless suspended by the Tribunal. Section 59(4) deals with transfers in contravention of the Securities Contracts (Regulation) Act, 1956, the SEBI Act, 1992, the Companies Act or any other law. Section 59(5) provides, for failure to comply with a Tribunal order, a fine on the company of one lakh to five lakh rupees and, for every officer in default, imprisonment up to one year or a fine of one lakh to three lakh rupees, or both.
The rule that may have taken the form away from you. Rule 9B of the Companies (Prospectus and Allotment of Securities) Rules, 2014, inserted by a Ministry of Corporate Affairs notification dated 27 October 2023, requires every private company other than a small company to issue securities only in dematerialised form and to facilitate dematerialisation of its existing securities. A holder of securities in such a company must have them dematerialised before transferring them, and before subscribing to or receiving further securities by way of private placement, bonus or rights offer. The original compliance date of 30 September 2024 was extended to 30 June 2025 by a notification dated 12 February 2025; producer companies have a longer period. A company inside the rule files Form PAS-6 half-yearly within sixty days of the end of each half-year, certified by a company secretary or chartered accountant in practice.
And the definition that moved the boundary back. With effect from 1 December 2025, the Companies (Specification of Definition Details) Amendment Rules, 2025 raised the thresholds in the definition of a small company under section 2(85) to paid-up share capital not exceeding ten crore rupees and turnover not exceeding one hundred crore rupees, from the earlier four crore and forty crore which had applied since September 2022. A public company, a company registered under section 8 and a holding or subsidiary company cannot be a small company whatever their size. Because rule 9B is framed by reference to that definition, the change takes a number of companies outside the dematerialisation requirement that were inside it before.
Stamp duty, after July 2020. Duty on a transfer of securities is charged on the instrument. Since 1 July 2020 the Indian Stamp Act, 1899 framework distinguishes instruments executed through a stock exchange or depository, where the duty is collected by the exchange, depository or registrar, from transfers made otherwise than through a stock exchange or depository, which fall under section 9B and on which the duty is payable by the transferor on the consideration stated in the instrument. The rate for a delivery-based transfer of a security other than a debenture is 0.015 per cent. How the duty is physically paid — share transfer adhesive stamps, franking or an e-stamping system — is a matter of State practice; in Delhi, share transfer stamps are recognised under the Delhi Province Stamp Rules, 1934 and an e-stamping facility also operates. A transmission by operation of law is not a transfer on an instrument and carries no such duty.
Three things this page deliberately leaves out. There is no valuation guidance, no figure for the tax consequences of a transfer, and no treatment of transfers involving a non-resident. The first two belong to a registered valuer and to a chartered accountant respectively; the third brings exchange control into the picture and the documentation then follows the approval. Where any of the three is in play, the transfer file is prepared after those questions are settled rather than alongside them.
What sits on other pages. The commercial bargain behind a sale of shares, as distinct from the instrument that moves them, is dealt with on our share purchase agreement page. Restrictions on transfer as between shareholders belong to the shareholders agreement. Keeping the statutory registers and minute books is its own subject. Each is referred to here rather than repeated.
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