Transfer and

Transmission of
Securities

Slide 22
TRANSFERABILITY- A BRIEF ON
PROVISIONS OF COMPANIES ACT 2013

– Section 44 of the Companies Act, 2013 states that the shares or debentures or
other interest of any member in a company.
– Shall be movable property
– Transferable in the manner provided by the articles of the company.
– Section 58(2), the securities or other interest of any member in a public company
shall be freely transferable.
TRANSFER OR TRANSMISSION
OF SECURITIES
– Free transferability of securities
– Instruments of transfer to be presented to the company
– Registration of partly paid up shares – Notice to the transferee
– Time Limit for Delivery of certificates
– Intimation to depository
– Transfer of securities by legal representative
– Transfer of shares by depository with an intent to defraud, is liable under Section 447
for fraud
– Punishment for Personation of Shareholders
REFUSAL OF REGISTRATION OF TRANSFER AND
TRANSMISSION AND APPEAL AGAINST REFUSAL

– If 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
– The transferee may appeal to the Tribunal against the refusal within a period of thirty days
from the date of receipt of the notice or in case no notice has been sent by the company,
within a period of sixty days from the date on which the instrument of transfer
– If a public company without sufficient cause refuses to register the transfer of securities
within a period of thirty days from the date on which the instrument of transfer or the
intimation of transmission, is delivered to the company, the transferee may, within a
period of sixty days of such refusal or where no intimation has been received from the
company, within ninety days of the delivery of the instrument of transfer or intimation of
transmission, appeal to the Tribunal.
RECTIFICATION OF REGISTER OF
MEMBERS

– Remedy to the aggrieved for not carrying the changes in the register of
members
– Order of the Tribunal
– Right to transfer not restricted
– Default in complying with the order
– Specific instances of rectification
– Mutation of name in other Company’s register of members
STAMP DUTY PAYABLE AND AFFIXATION/
CANCELLATION OF STAMPS

– The stamp duty payable on transfer of debentures is, however, governed by

Article 62(b) of Schedule I to the Indian Stamp Act, 1899, and also varies from
State to State. In this case, the duty would be:
1. The duty applicable where the deed is executed, or
2. The duty applicable where the registered office of the company is situated,
whichever is higher.
– Section 56(1), a company cannot register the transfer of securities unless a
proper instrument of transfer duly stamped
LOST TRANSFER DEEDS

– Section 56(1) of the Act provides that where the instrument of transfer has been
lost or the instrument of transfer has not been delivered within the prescribed
period (within 60 days from the date of execution of the instrument of transfer),
the company may register the transfer on such terms as to indemnity as the
Board may think fit.
DELEGATION OF POWERS FOR
TRANSFER
– It is the articles of the company which authorize the Board of directors to
accept or refuse transfer of securities, at their discretion
– The Board of directors to delegate the powers suitably
TRANSFER OF DEBENTURES

– In case of transfer of debentures, a proper instrument of transfer duly stamped,

dated and executed by or on behalf of the transferor and the transferee should
be delivered to the company by the transferor or transferee within a period of
sixty days from the date of execution along with the certificate relating to the
debentures or if no such certificate is in existence with the letter of allotment of
debentures.
TRANSFER OF SHARES TO A
MINOR
– A minor is not competent to enter into any contract, as under Section 11 of the
Indian Contract Act, 1872
– A minor cannot enter into a contract or agreement except through a guardian
– As per Section 153, no notice can be taken of the fact that the guardian holds a
share in trust for a minor
– The articles of association of a company cannot impose a blanket ban
prohibiting transfer of shares in favour of a minor, as such a restriction is
unreasonable
TRANSFER OF SHARES TO
PARTNERSHIP FIRM
– A firm is not a person and as such is not entitled to apply for membership. The
Department of Company Affairs (Now, Ministry of Corporate Affairs) has in its
Circular No. 4/72 dated 9.2.1972 stated that a firm not being a person cannot
be registered as a member of a company except where the company is licensed
under Section 25 (Corresponds to section 8 of the Companies Act, 2013).
TRANSFER OF SECURITIES TO A
BODY CORPORATE
– An incorporated body being a legal person can acquire securities in its own
name. Where a company is a transferee, the following documents are required
to be submitted to the company:
1. A certified true copy of the Board resolution and/or power of attorney authorizing
the signatory of the instrument of transfer to execute the instruments;
2. A certified true copy of a Board resolution passed under Section 179(3)(e) of the
Companies Act; and
3. A certified true copy of Memorandum and Articles of Association of a company.
TRANSMISSION OF SECURITIES

– Transmission in case of sole owner

– Transmission of shares to widow
– Transmission of joint holdings
Transfers:

– TRANSFER OF SECURITIES REGISTERED WITH A DEPOSITORY

– BLANK TRANSFER
– FORGED TRANSFER
– DEATH OF TRANSFEROR OR TRANSFEREE BEFORE REGISTRATION OF TRANSFER
1. Proof in a transfer by representative
2. Relationship between Transferor and Transferee
– RIGHTS OF TRANSFEROR
EFFECTS OF TRANSFER

– Priority among Transferees

– Pledging of Shares
COMPANY’S LIEN ON SHARES

– Extent and waiver of lien

– Enforcement and postponement of lien