Transfer of Shares
In short
Physical shares of a private company are transferred by executing a share transfer deed in Form SH-4, paying stamp duty, and submitting the deed with the share certificate to the company for board approval within the prescribed time. Transfers must follow any restrictions in the articles, and transfers involving non-residents must also comply with FEMA pricing and reporting rules.
Overview
Share transfers happen when a co-founder exits, an investor buys in, or shares move within a family. The transfer has income tax consequences for the seller and, in some cases, the buyer, so valuation should be considered before signing.
Private companies that are not small companies are required to hold their securities in dematerialised form, in which case transfers take place through depositories. We check which rules apply to your company.
Key requirements
- Compliance with transfer restrictions in the articles
- Valuation where required by tax or FEMA rules
Documents required
- Share transfer deed (SH-4)
- Original share certificate
- PAN of transferor and transferee
- Board resolution approving the transfer
We share an exact checklist for your case before you start, since requirements vary with the structure and the people involved.
Process
Review
We review the articles, valuation and tax implications.
Execute
SH-4 is executed and stamped.
Approve
The board approves the transfer and the certificate is endorsed.
Record
The register of members is updated, with FEMA filings where applicable.
What KNAP Advisory handles
- Documentation and stamp duty
- Board approval and register updates
- Valuation coordination
- FEMA reporting for cross-border transfers
Frequently asked questions
Is stamp duty payable on transfer of shares?
Yes. Stamp duty is payable on transfers of shares under the Indian Stamp Act, at the rate applicable on the date of transfer.