Company Share Transfer
Transfer deeds, stamp duty and register updates for moving shares between existing or incoming shareholders.
Shares in a private company are transferred by a written instrument, not simply by agreement. The transfer is effective against the company only when the board registers it and the name of the transferee is entered in the register of members.
Private companies almost always restrict transfers in their articles, commonly through a pre-emption right requiring shares to be offered to existing members first. Ignoring that restriction can make the transfer voidable, so the articles are the first thing to read.
What this costs
Company
₹6,554 plus GST
- Application Filing in MCA
- Amended memorandum and articles handed to you
The steps that make a transfer valid
- Check the articles for pre-emption rights and any board discretion to refuse
- Give notice to the company and to existing members where pre-emption applies
- Execute Form SH-4, the instrument of transfer, signed by transferor and transferee
- Pay stamp duty on the instrument at the prescribed rate on consideration or value
- Deliver SH-4 with the share certificate to the company
- The board passes a resolution registering the transfer
- The register of members is updated and a new certificate endorsed or issued
Stamp duty and valuation
Stamp duty on a share transfer is payable at a rate applied to the consideration or the market value of the shares. It is a statutory charge paid at actuals, separate from professional fees.
Where shares change hands at less than fair value, income tax consequences can arise for both sides under the provisions dealing with transfers below fair market value. For anything other than a transfer at a clearly arm’s length price, a valuation report is worth obtaining.
Dematerialisation changes the mechanics
Most private companies are now required to hold their shares in dematerialised form. Where shares are dematerialised, the transfer happens through the depository system rather than by delivering a physical certificate.
The instrument and the board approval still matter, but the mechanics differ. We confirm which route applies before starting.
How we handle it
- 1 Reading the articles We check the transfer restrictions, pre-emption rights and any board discretion before anything is executed.
- 2 Pre-emption formalities Where existing members have a first right, the notices and waivers are prepared and circulated.
- 3 Executing SH-4 The instrument is drafted and executed by both parties with the consideration recorded.
- 4 Stamping Stamp duty is computed and paid on the instrument at the applicable rate.
- 5 Board approval The board resolution registering the transfer is drafted and the minutes recorded.
- 6 Records updated The register of members is updated and the share certificate endorsed or a fresh one issued.
Frequently asked questions
Can the board refuse to register a transfer?
In a private company, yes, where the articles give it that power. The refusal must be for reasons recorded, and notice must be given within the period the Act prescribes.
Who pays the stamp duty?
It is generally borne by the transferor unless the parties agree otherwise, and it is payable on the instrument at the prescribed rate on consideration or value.
What if the share certificate is lost?
A duplicate must be issued before the transfer proceeds, which involves an indemnity, an affidavit and a board resolution.
Is a valuation report necessary?
Not always, but strongly advisable where the transfer is between related parties or at other than a clearly arm’s length price, because tax provisions can treat the difference as income in the hands of one or both parties.
Does the transfer need to be filed with the Registrar?
A share transfer itself is not filed as a separate form, but the changed shareholding is reported in the company’s annual return in MGT-7.
What is not included. Government fees, statutory charges, stamp duty, court and registry fees, digital signature costs and any third-party professional charges are separate and payable at actuals. GST applies on professional fees where indicated. Prices shown are indicative and may change without notice; we confirm the total in writing before any work begins — see our terms on pricing.
Talk to us about Company Share Transfer
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