Share Transfer

Who Needs This Service

Founders exiting or selling a stake, investors buying shares, family members receiving shares by gift or inheritance, employees exercising and transferring shares, and companies restructuring ownership all need this service.

Startups in particular need clean share transfers because investors and acquirers examine the cap table and shareholding records. Errors, missing stamp duty or poor documentation can delay funding or create valuation disputes.

Non-resident investors and Indian entities with foreign shareholders should pay attention to FEMA rules, including pricing guidelines and reporting.

If you plan to transfer shares in a company with a shareholders' agreement, check it carefully, since it may include lock-in periods, tag-along or drag-along rights and consent requirements in addition to the Articles.

Key Benefits

• Properly executed SH-4 with correct stamp duty
• Board approval and updated Register of Members
• Timely issue of share certificates
• Support for FEMA/FC-TRS where non-residents are involved
• Clean records for fundraising and due diligence

Next Steps & Related Services

After the transfer, update the cap table and statutory registers and file any required forms.

Related services: Increase of Authorised Capital, MOA/AOA Alteration, Annual Compliance, ROC Compliance and Seed Funding.

Common Mistakes

• Ignoring Articles restrictions such as right of first refusal.
• Not paying stamp duty or using the wrong rate.
• Delivering the SH-4 to the company after 60 days.
• Skipping FEMA reporting for non-resident transfers.
• Not updating the Register of Members and cap table.

Timeline, Costs & Practical Tips

The company has one month after receiving the transfer instrument to issue the new certificate. Costs include stamp duty (rate disputed across sources), professional charges and, where relevant, FEMA filing.

Practical tip: agree the price and valuation in writing and confirm Board approval before signing SH-4.

Additional Information

Section 56 of the Companies Act, 2013 requires companies to register transfers on a properly executed instrument of transfer and to deliver new certificates within one month. Section 44 treats shares as movable property transferable in the manner provided by the Articles. Stamp duty under the Indian Stamp Act, 1899 applies to transfer instruments, and capital gains tax under the Income Tax Act applies to the seller. For private companies, the Articles often restrict transfers, which is why they must always be checked first.