OMTEX CLASSES: STATUTORY PROVISIONS REGARDING TRANSFER OF SHARES?

STATUTORY PROVISIONS REGARDING TRANSFER OF SHARES?



Meaning: -one of the important features of the joint stock company is that its shares are transferable. Section 82 empowers every shareholder to transfer his shares in the manner laid down in the Articles and in accordance with the various provision of law. A transfer of shares takes place when a registered shareholder transfers his shares by sale or otherwise to another person voluntarily.

Statutory provision regarding transfer of shares:

1.       Instrument of transfer (sec.108): -An application for transfer of shares must be submitted in the prescribed form called as instrument of transfer. It must be duly filled, stamped and signed by transferor and transferee. The instrument of transfer should be submitted in company's office along with share certificate.

2.       Transfer by legal representatives (sec.109): -In case of deceased member, a transfer executed by the legal representative of deceased member is valid.

3.       Application for transfer (sec.110): -An application for the registration of a transfer of the share may be made either by the transferor or by the transferee. Transferor is the shareholder who wants to transfer shares. Transferee is the one in whose favour shares are transferred.

4.       Power to refuse transfer (sec. 111): - Directors have right to refuse transfer of shares. The right of transfer is restricted by the Articles on the following grounds.
a)       When the transferee is a minor.
b)       When a company has a lien on the shares, to recover any amount payable by the shareholder to the company.
c)       When the intention of the transferee is malafide i.e. he wants to take transfer of large number of shares with the object of controlling the management.
d)       When the Central Government gives a direction to the company not to give effect to the transfer of shares.
e)       When the instrument of transfer is incomplete.

5.       Time limit for issue of share certificates: -
Every company has to issue share certificate within two months from the date of registration of the transfer of shares.