Distinguish Between Transfer of Shares and Transmission of Shares | 12th HSC Secretarial Practice (S.P.) Chapter 3
The distinction between Transfer of Shares and Transmission of Shares is the most important procedural question from Maharashtra State Board (MSBSHSE) 12th Standard HSC Secretarial Practice (S.P.) Chapter 3: Issue of Shares. In the HSC Board Examination, this 5-star question is repeatedly asked under Question 4 (Distinguish Between) carrying 4 Marks. Below is the complete, textbook-accurate tabular solution strictly aligned with the latest Balbharati Textbook and official board marking scheme.
Board Exam Marking Scheme Tip: Each Distinguish Between question in Q.4 carries 4 Marks (1 mark per valid point). Always present your answer in a neat 3-column table including the Basis of Distinction. Write at least 5 to 6 clear points (starting with Meaning, Nature of Action, Instrument of Transfer, and Stamp Duty) to guarantee a full 4 out of 4 score!
Distinguish Between: Transfer of Shares and Transmission of Shares
| Sr. No. | Basis of Distinction | Transfer of Shares | Transmission of Shares |
|---|---|---|---|
| 1. | Meaning | Transfer of shares means the voluntary transfer of title (ownership) of shares by a member to another person by way of sale, gift, or exchange. | Transmission of shares means the transfer of title (ownership) of shares by the operation of law upon the death, insolvency, or insanity of a member. |
| 2. | When Done | It takes place when the member voluntarily wishes to sell his shares or give his shares as a gift to another person. | It takes place only upon the death, insolvency (bankruptcy), or insanity (lunacy) of a shareholder. |
| 3. | Nature of Action | It is a voluntary act (deliberate action) initiated by the shareholder himself. | It is an involuntary act (compulsory action) that occurs automatically due to the operation of law. |
| 4. | Parties Involved | In transfer of shares, there are two parties involved: the "Transferor" (seller/giver) and the "Transferee" (buyer/receiver). | Generally, there is only one party involved: the nominee, legal heir (in case of death), or the Official Receiver (in case of insolvency). |
| 5. | Instrument of Transfer | Transfer requires a formal Instrument of Transfer (Transfer Deed in Form SH-4) duly signed by both the transferor and the transferee. | No Instrument of Transfer is required. Only legal proof such as a death certificate, succession certificate, probate of will, or insolvency order is needed. |
| 6. | Initiated By | The process is initiated by the Transferor or the Transferee. | The process is initiated by the Legal Representative (Legal Heir) or the Official Receiver. |
| 7. | Consideration | Transfer of shares is done for a monetary consideration (price paid by the buyer), except when shares are given as a gift. | No consideration is involved here; the legal heir or official receiver does not pay any money to acquire the shares. |
| 8. | Liability | The liability of the transferor ceases (ends) completely once the transfer of shares is approved and registered by the company. | The original liability of the member continues in case of transmission (limited to the value of the deceased or insolvent member's estate). |
| 9. | Stamp Duty | Stamp duty has to be paid at the prevailing market value of the shares as per the Indian Stamp Act. | No stamp duty is required to be paid in the case of transmission of shares. |
Quick Memory Trick to Remember All Points in the Exam
Memory Shortcut (Mnemonic — "MWN-PICS"):
Remember these 6 easiest points from the Balbharati textbook to write in under 4 minutes:
1. Meaning (Voluntary Transfer by Member vs. Transfer by Operation of Law)
2. When Done (Sale or Gift of Shares vs. Death, Insolvency, or Insanity)
3. Nature of Action (Voluntary Act vs. Involuntary Act)
4. Parties Involved (Two Parties: Transferor & Transferee vs. One Party: Legal Heir / Official Receiver)
5. Instrument & Consideration (Instrument of Transfer & Consideration Needed vs. Neither Needed)
6. Stamp Duty (Stamp Duty Payable vs. No Stamp Duty Payable)
Key Concept Summary for Objective Questions (Q.1)
- Governing Legal Section: Provisions relating to both Transfer and Transmission of shares are governed by Section 56 of the Companies Act, 2013.
- Form for Instrument of Transfer: For physical shares, the Instrument of Transfer must be executed in prescribed Form SH-4 and submitted to the company within 60 days from the date of execution.
- Time Limit for Share Certificate: The company must deliver the share certificate after registering a transfer or transmission within 1 month from the date of receipt of the instrument of transfer or intimation of transmission.
- Official Assignee / Receiver: Upon the insolvency of a member, his shares are transmitted to the Official Receiver (or Official Assignee) appointed by the court.