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Complete overview on how to Transfer Shares in Companies

This article attempts to lay down transfer shares in a Company. Such transfer may be between existing shareholders or a buy-out. First lets check the major three steps in transfer of shares as follows:


Filing the Form SH-4 (in case of Companies with physical shares) with adequate stamp duties (Stamp duties will be dependent on the valuation of consideration plus the state or union territory where the agreement is executed)


Acceptance of Form SH-4 by Share Transfer Registrar and Resolution by Directors accepting the transfer (in case of private limited Companies)


Issuance of new share certificates/ transfer in new DEMAT account.

While executing the transfer of shares, one above should keep in mind the compliance with the Companies Act/ LLP Act/ Competition Act/ FEMA and FDI laws.

Following important points need to be kept in mind for buying/selling Companies by acquisition:

  1. Professional advice/valuation letters/ due diligence etc. in determining the valuation of the Company
  2. Term sheets and Letter of Intent (LoI) to reflect the initial points of agreement and steps to be followed
  3. Non Disclosure Agreement (NDA) – very important especially in case of due diligence where confidential information pertaining to business operations, assets, finances will come to the knowledge of the party intending the same
  4. Shareholders agreement. This is very important and will matter the most in any legal dispute.
  5. Determination of approvals required from any authorities
  6. Alteration of Articles, wherever required, to incorporate specific clauses of the Shareholders Agreement
  7. Resolutions to be passed by the Directors/ shareholders in order to execute the transaction
  8. Determination of stamp duty to be payable on the transaction. Specifically refer the Indian Stamp (Collection of stamp duty through stock exchanges, clearing corporations and Depositories) Rules, 2019.
  9. Study of Articles of Association to determine if the Directors need to follow a specific procedure for transfer of shares in a private limited Company
Our Team

Corporate Compliance Team at Entrecap Business Services has wide experience in dealing with all above matters. Our team of Chartered Accountants and Company Secretaries have brought many assignments to successful conclusion.

We would love to extend our expertise to all entrepreneurs looking to avail of the above services pertaining to transfer of shares in Companies.

Sometimes, transfer of shares in Companies also require change in Directors. You can read the same here.

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