FINANCIAL STRUCTURE AND MEMBERSHIP – VII – TRANSFER AND TRANSMISSION OF SECURITIES

FINANCIAL STRUCTURE AND MEMBERSHIP – VII – TRANSFER AND TRANSMISSION OF SECURITIES

A Company shall not register transfer of shares in, or debentures of, the company, unless a proper instrument of transfer duly stamped and executed by or on behalf of the transferor and transferee has been delivered to the company along with the certificate relating to the company along with the certificate relating to the shares or debenture. – Section 108(1)

The instrument of transfer of shares must be in prescribed Form 7B.

Section 108(1A) - Provision of Section 108 not apply to Transfer of Shares Registered with the Depository

Extension of time Limit for presentation to prescribed Authority under Section 108(1D)

Application for transfer - Section 110

      (1) An application for the registration of a transfer of the shares or other interest of a member in a company may be made either by the transferor or by the transferee.

     (2) Where the application is made by the transferor 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 makes no objection to the transfer within two weeks from the receipt of the notice.

Transfer of Securities of a Public Company (Section 111A)

Provides that securities of a company other than a private company are freely transferable. The Board of Directors of a Company or the concerned depository has no discretion has no discretion to refuse or without transfer of any security.

Section 108A prohibits any individual, firm body corporate, group, or body corporate under common management to acquire more than 25 percent of the paid up equity share capital of a public without the prior approval of the Central Government.  

Section 108D(1) empowers the Central Government to direct a company not to give effect to any transfer to share if it was satisfied that such transfer was likely to bring about a change in the controlling interest of the company which will be prejudicial to the interest of the company or to public interest.

Any transfer made during winding up of a company is void, unless it is made with the sanction of the Tribunal and any alteration in the status of the members of the company, made after the commencement of the winding up, shall be void – Section 536

Power to refuse registration and appeal against refusal - Section 111   

If a company refuses to register the transfer of, or the transmission by operation of law of the right to, any shares or interest of a member in, or debentures of, the company, it shall, within two months from the date on which the instrument of transfer, or the intimation of such transmission, as the case may be, was delivered to the company, send notice of the refusal to the transferee and the transferor or to the person giving intimation of such transmission, as the case may be, giving reasons for such refusal.

The transferor or transferee, or the person who gave intimation of the transmission by operation of law, as the case may be, may appeal to the Tribunal against any refusal.

Certification of transfers - Section 112

The certification by a company of any instrument of transfer of shares in, or debentures of, the company, shall be taken as a representation by the company to any person acting on the faith of the certification that there have been produced to the company such documents as on the face of them show a prima facie title to the shares or debentures in the transferor named in the instrument of transfer, but not as a representation that the transferor has any title to the shares or debentures.

TRANSMISSSION OF SHARES –

A person acquires an interest in property by operation of any provision of law, such as by right of inheritance or succession. It is not to be treated as transfer.