Share Transfer of Private Company

Share Transfer of Private Limited Company

Share Transfer is the process of transferring the ownership of shares from one person (transferor) to another (transferee) in a Private Limited Company. Share transfers in a Private Limited Company are subject to restrictions in the Articles of Association (AoA), typically requiring board approval before the transfer can take effect.

Key Points About Share Transfer

• Private limited companies have the right of first refusal — existing shareholders may have pre-emption rights.
• Board approval is mandatory before shares can be transferred.
• Stamp duty of 0.25% of the consideration (transfer value) is payable on the transfer deed.
• The Register of Members must be updated to reflect the new shareholding.
• New share certificates must be issued to the transferee within 2 months of registration.

Process

1. Transferor fills, dates, and signs the Share Transfer Form (SH-4).
2. Convene a board meeting to approve the share transfer.
3. Board passes a resolution approving the transfer (after checking AoA restrictions).
4. Pay stamp duty of 0.25% of the transfer consideration on Form SH-4.
5. Update the Register of Members and Register of Share Transfers.
6. Issue new share certificates to the transferee within 2 months.
7. File Form MGT-14 if the transfer results in any change in control or shareholding pattern.

Documents Required

• Share Transfer Form (SH-4) filled and signed by the transferor.
• Original Share Certificate of the transferor.
• Board resolution approving the transfer.
• PAN Card and Aadhaar Card of the transferee.
• Stamp duty payment proof (franking/e-stamping of SH-4).
• Consideration proof — bank transfer receipt or valuation report.

Timeline

7–15 working days from board approval to issuance of new share certificates.

Why Choose Tax Precision?

• Expert review of AoA restrictions and pre-emption right compliance.
• Share valuation guidance for income tax purposes (especially for non-relative transfers).
• Complete SH-4 preparation and stamp duty management.
• Register of Members and share certificate update support.
• Capital gains tax advisory for the transferor.