What is the difference between transfer and transmission of shares? | Business Standard News

Clipped from: https://www.business-standard.com/podcast/markets/what-is-the-difference-between-transfer-and-transmission-of-shares-122082100856_1.html

What if you want to transfer your share holdings to someone in the family? You can transfer those holdings. But that’s not exactly same as transmission of shares. What are the differences?

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While the transfer of shares and transmission of shares suggest a change in ownership of the title, the former is voluntary and initiated by the transferee or transferor. And the latter is operational by law and is initiated by the legal representative or receiver.

What is transfer of shares?

Transfer of shares is the intentional transfer of title of shares between the two persons. The shares of a public company are freely transferable unless the company has a valid reason to disallow the same. The shares of a private limited company are not transferable subject to certain exceptions. A transfer deed is executed for the transfer of shares.

What is transmission of shares?

Transmission of shares happens when the holder is no more or has become lunatic or insolvent. It can also take place when the holder of shares is a company, and it has wound up. There is no transfer deed executed here, and the transferee will be given the rights to the shares, and the transmission is recorded only when the transferee gives proof of entitlement to the shares. In case of the death of the holder, the shares will be transferred to the legal representative and in case of insolvency to the official assignee.

What is required for share transfer?

Form SH-4 has to be duly stamped, dated, and is executed by or on behalf of the transferor and the transferee and specifies all the details like name, address, occupation if any of the transferee. It has to be delivered to the company by either parties within 60 days from the date of execution along with a certificate of securities or letter of allotment of securities as available. If the transferor makes an application for the transfer of partly paid shares, then the company gives notice of the application form SH-5 to the transferee and the transferee must give no objection to the transfer within two weeks from the receipt of the notice.

Requirements for share transmission

The documents for transmission of shares include Certified Copy of Death Certificate; Self Attested Copy of PAN; Succession certificate/ Probate of Will/Will/ Letter of Administration/ Court Decree; Specimen signature of successor etc.

Timeline for delivery of certificate

Every company must deliver the certificates of all securities transferred or transmitted within a month from the date of receipt of the instrument of transfer in case of transfer or intimation of transmission as applicable unless prohibited by any provision of law or any order of court, tribunal, or other authority.

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