Transfer and Transmission of Securities
TRANSFER: Transfer of shares is a transaction resulting in a change of share
ownership. A shareholder, whether in public or private company, has a property
in his share which he has a right to dispose of, subject only to any express
restriction which may be found in the articles of the company.
TRANSMISSION: Transmission is the automatic process; when a shareholder dies, his
shares immediately pass to the personal representatives or, if a member is
declared bankrupt, their shares will vest in the trustee in bankruptcy.
DELIVERY OF SHARE
CERTIFICATES
Every company
shall, unless prohibited by any provision of law or any order of Court,
Tribunal or other authority, deliver the certificates of all securities
allotted, transferred or transmitted—
Within a period of 2 months from the date of incorporation, in the event
of subscribers to the memorandum;
Within a period of 2 months from the date of allotment, in case of any
allocation of any of its shares;
Within a period of 1 month from the date of receipt by the company of
the mechanism of transfer or intimation of transmission; and
Within a period of 6month from the date of allotment in event of any
allotment of debentures
Nevertheless, where the
securities are dealt with in a depository; the company will intimate the
details of allotment of securities to depository right away on allotment of
such securities (2) Nothing in sub-section (1) shall prejudice the power
of the company to register, on receipt of an intimation of transmission of any
right to securities by operation of law from any person to whom such right has
been transmitted.
NOTE: Where an
application is made by the transferor alone and relates to partly paid shares,
the transfer shall not be registered, unless the company gives the notice of
the application, in such manner as may be prescribed, to the transferee
and the transferee gives no objection to the transfer within two weeks from the
receipt of notice.
Provided that where the securities are dealt with in a depository, the company
shall intimate the details of allotment of securities to depository immediately
on allotment of such securities.
Application by Survivor
In event of death of shareholder of Company, The survivor in case of
joint holding or legal heir, as the case may perhaps be, who want transmission
by operation of law in his or her favor, will file a simple application with
the Company with pertinent documents such as:
- Death Certificate,
- Succession
Certificate,
- Probate,
- Specimen
Signature of Successor etc., dependent upon various circumstances may
perhaps be considers essential for transmission by the Company
On submission of the above documents, the company should methodically
check the application for transmission of shares with definite attention to the
following:
- Whether the
application for transmission contains accurate details of the deceased
member, e.g., his name, address, occupation, father’s or husband’s name,
his shareholding and is accompanied by the pertinent share certificates.
- Whether the
applicant has been sent along with the application:
- Death certificate, together with a certified true copy, of the
deceased member;
- Succession certificate, if the deceased member has left no Will;
- If the deceased member has left a Will, related probate or letter
of administration;
- Affidavit by the legal heir as declaring his right in the shares;
and
- Indemnity bond binding him and his heirs, assigns etc. to insure
the company in the event of the company having to face any proceedings,
sustain some loss etc.
Where any default is made in complying with the provisions of
sub-sections (1) to (5), the company shall be punishable with fine which shall
not be less than twenty-five thousand rupees but which may extend to five lakh
rupees and every officer of the company who is in default shall be punishable
with fine which shall not be less than ten thousand rupees but which may extend
to one lakh rupees.
Without
prejudice to any liability under the Depositories Act, 1996 (22 of 1996), where
any depository or depository participant, with an intention to defraud a
person, has transferred shares, it shall be liable under section 447.
Punishment for
Personation Of Shareholder
If any person
deceitfully personates as an owner of any security or interest in a company, or
of any share warrant or coupon issued in pursuance of this Act, and thereby
obtains or attempts to obtain any such security or interest or any such share
warrant or coupon, or receives or attempts to receive any money due to any such
owner, he shall be punishable with:
1
year<=imprisonment<=3 years and
1
lakh<=fine<=5 lakh
DISCLAIMER: THE
ARTICLE IS BASED ON THE RELEVANT PROVISIONS AND AS PER THE INFORMATION EXISTING
AT THE TIME OF THE PREPARATION. IN NO EVENT I SHALL BE LIABLE FOR ANY DIRECT
AND INDIRECT RESULT FROM THIS ARTICLE. THIS IS ONLY A KNOWLEDGE SHARING
INITIATIVE.
THE AUTHOR – CS DEEPAK
SETH (ASSOCIATE PARTNER HELPINGHANDS PROFESSIONALS LLP) AND CAN BE REACHED AT CONTACTHHPRO@GMAIL.COM
OR 9910248911.
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