A transfer is defined as the moving of an asset. Physical mobility, asset ownership, or both may be considered movements. This movement may be voluntary or mandated by legislation in the case of securities. In order to clearly explain the concept of the Transfer and Transmission of Shares and make them easier to distinguish from one another, we must first learn the meaning of some terms that are frequently used in connection with them.
The transfer of shares occurs through a contract and is a voluntary act on the part of the shareholder. The transfer of shares occurs as a result of the law's operation upon the death of the shareholder or in the event that the holder becomes bankrupt or insane.
Definition of Share Transfer
The intentional transfer of ownership of the shares between the transferor (one who transfers) and the transferee is referred to as a transfer of shares (one who receives). A public corporation's shares can be freely transferred unless the company has a good reason to forbid it. A private limited company's shares cannot be transferred, with some exceptions. For the transfer of shares, a transfer document is executed.
Definition of Share Transmission
As a result of the operation of legislation, shares are transferred when the original holder has passed away, has become insane, or is insolvent. It may also occur if the stockholder is a company that has filed for bankruptcy. The rights to the shares are granted to the transferee without the execution of a transfer document, and the transmission is only recorded if the transferee provides evidence of their claim to the shares.
The shares will be given to the legal representative in the event of the holder's death and to the official assignee in the event of insolvency. The distinctions between the transfer of shares and transmission of shares are shown in the following way:
Provisions In accordance with the 2013 Companies Act and the 2014 Companies (Share Capital & Debenture) Rules
According to Rule 11 of the Companies (Share Capital & Debenture) Rules, 2014 and Section 56 of the Companies Act, 2013.
Exchange of shares
It will only take effect if a proper instrument of transfer, in Form SH-4, as specified in sub-rule 1 of Rule 11 of the Companies (Share Capital & Debenture) Rules 2014, is executed by or on behalf of the transferor and the transferee and includes all the necessary information, including the transferee's name, address, and occupation if any. It must be presented to the company by one of the parties along with a certificate of securities or a letter of allocation of securities, as appropriate, within 60 days of the date of execution.
If the transferor submits an application for the transfer of partially paid shares, the company notifies the transferee of the application using Form SH-5 as specified in sub-rule 3 of Rule 11 of the Companies (The Share Capital & Debentures) Rules 2014, and the transferee has two weeks from the day that you were given notice to revoke any objections.
The transfer of shares
When the application for the transmission of shares and the necessary documentation is approved, it will be impacted. Transfer deed execution is not necessary. The following documents are necessary for the transfer of shares. The following documents are necessary for the transfer of shares.
Certified Copies of Death Certificates Copies of PAN with Self Attestations
Probate of a Will, a Will, a Letter of Administration, or a Court Order
Specimen of the successor's signature
The two scenarios' respective deadlines for certificate delivery-
Unless otherwise prohibited by any legal provision or order of a court, tribunal, or other authority, every company must deliver the certificates of all securities transferred or transmitted within one month of the date of receipt of the instrument of transfer in cases of transfer or intimation of transmission, as applicable.
Penalty for failure to comply
The firm shall be subject to a punishment of not less than Rs. 25,000 but not less than Rs. 5,00,000 for any failure to comply with the above, and each officer of the company who is in default shall be subject to a fine of not less than Rs. 10,000 but not less than Rs. 100,000. Both the transfer of shares and the transmission of shares aim to change who owns the shares' title, but they differ in that the transfer of shares is a choice made by the transferee or transferor, whereas the transmission of shares is a legal requirement stated by the receiver or legal representative.
By and large, the transfer of shares occurs only in the event of the shareholder's death or insolvency, although the transmission of shares frequently happens when the property is transferred. Furthermore, although the transmission of shares occurs frequently, it only does so when a certain event occurs.
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