The Classic Partners LLP

Share Transfer in a Company

Legally valid transfer of shares in private and public companies under Section 56 of the Companies Act, 2013 — Form SH-4 execution, stamp duty, board approval, register updates, and share certificate endorsement, all handled with complete documentation.

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What is a Share Transfer?

A share transfer is the voluntary handing over of ownership of shares from a transferor to a transferee. Under Section 56 of the Companies Act, 2013, physical shares are transferred through a duly stamped and executed instrument of transfer in Form SH-4, delivered to the company within 60 days of execution, after which the board approves the transfer and the register of members is updated.

In a private limited company, the Articles of Association restrict the right to transfer — typically through pre-emption rights in favour of existing shareholders — so the articles must be checked before any transfer. Shares held in demat form move through depository instructions instead of SH-4; see our dematerialisation of shares service if your company is moving to electronic holdings.

Common Share Transfer Situations

Entry or exit of an investor, co-founder, or strategic partner.
Transfer of shares between family members or within a promoter group.
Secondary sale of ESOP shares by employees.
Group restructuring and consolidation of holdings.
Transmission of shares to legal heirs on the death of a shareholder (by operation of law).

Share Transfer Procedure — Step by Step

Check the AOA for transfer restrictions and complete any pre-emption or right-of-first-refusal process.
Execute Form SH-4, signed by both transferor and transferee, stating the consideration.
Pay stamp duty of 0.015% of the consideration as per the amended Indian Stamp Act.
Deliver the stamped SH-4 with the original share certificates to the company within 60 days of execution.
Hold a board meeting to approve and register the transfer.
Endorse or issue new share certificates within one month of registration.
Update the register of members and reflect the change in the next annual return.

Our Share Transfer Services

SH-4 Drafting & Execution

Correctly completed transfer deeds with consideration, folio, and witness details.

Stamp Duty Compliance

Computation and payment of stamp duty on the transfer at the applicable rate.

AOA & Pre-emption Check

Review of transfer restrictions, offer notices, and waivers before execution.

Board Approval & Registers

Board resolutions, register of members updates, and minutes documentation.

Certificate Endorsement

Endorsement or fresh issue of share certificates within statutory timelines.

Transmission of Shares

Documentation for legal heirs — succession proofs, indemnities, and board approval.

Why Choose The Classic Partners

Error-free SH-4 documentation that holds up in diligence and disputes.
Tax-aware structuring with valuation support where transfers are below fair market value.
Strict statutory timelines for delivery, registration, and certificate issue.
Transparent fees and a dedicated point of contact for both parties.

Frequently Asked Questions

Which form is used for a share transfer?

Physical shares are transferred using Form SH-4, the instrument of transfer prescribed under Section 56, executed by both parties and duly stamped. Shares held in demat form are transferred through delivery instructions to the depository participant, not through SH-4.

What is the stamp duty on a transfer of shares?

Under the amended Indian Stamp Act effective from 1 July 2020, transfer of shares attracts stamp duty of 0.015% of the consideration amount, applied uniformly across India.

What are the time limits in a share transfer?

The executed SH-4 must be delivered to the company within 60 days of execution, and the company must endorse or deliver the share certificates within one month of registering the transfer.

Can a private company refuse to register a share transfer?

Yes. A private company's articles restrict transfers, and the board may refuse registration in accordance with the AOA. The refusal must be communicated with reasons within 30 days, and the aggrieved party may appeal to the NCLT.

What is the difference between transfer and transmission of shares?

Transfer is a voluntary act between living parties using Form SH-4 with stamp duty. Transmission happens by operation of law — on death or insolvency of a shareholder — based on succession documents, and no SH-4 or stamp duty is required.

Is a valuation report required for a share transfer?

It is strongly advisable. Transfers of unlisted shares below fair market value can trigger tax in the hands of the buyer under Section 56(2)(x) and for the seller under Section 50CA of the Income Tax Act, so a valuation report protects both parties.

Planning a transfer of shares?

Get the SH-4, stamp duty, board approvals, and certificates handled correctly with full documentation.