Share Transfer & Transmission

Share Transfer: This is when a shareholder voluntarily sells or transfers their shares to another person or entity. It’s a choice made by the shareholder.

Transmission of Shares: This occurs when shares are transferred involuntarily due to events like the death, bankruptcy, or insolvency of a shareholder. It’s not a choice but rather happens automatically due to circumstances.

Share Transfer:

• Shareholders who wish to sell or transfer their ownership stake in a company.
• Buyers or transferees who want to acquire ownership of shares in a company.
• Companies themselves, as they need to update their records and shareholder registers to reflect changes in ownership.

Transmission of Shares:

• Legal heirs or beneficiaries of a deceased shareholder who inherit the shares.
• Courts or legal authorities involved in the settlement of estates in the case of death or insolvency.
• Trustees or administrators appointed to handle the affairs of bankrupt or insolvent shareholders.
• Companies, which must comply with legal requirements and update their shareholder registers to reflect the transfer of shares due to transmission events.

Documents Required for Share Transfer:

• Share Transfer Deed or Form
• Share Certificate
• Board Resolution
• Stamp Duty
• Identification Documents
• Any Additional Agreements

Documents Required for Transmission of Shares:

• Death Certificate
• Probate or Letters of Administration
• Transmission Application Form
• Identification Documents
• Court Order or Legal Documents (if applicable)

Share Transfer Process:

1. Agreement: The transferor (seller) and transferee (buyer) reach an agreement on the transfer of shares, including the price and terms of the transfer.
2. Execution of Transfer Deed or Form: Both parties complete and sign the share transfer deed or form, which legally transfers the ownership of shares from the transferor to the transferee.
3. Board Approval (if required): If the company’s articles of association or shareholders’ agreement require board approval for share transfers, the board of directors approves the transfer.
4. Stamp Duty Payment (if applicable): Depending on the jurisdiction, stamp duty may be payable on the transfer of shares. The necessary stamp duty is paid, and the relevant documents are stamped accordingly.
5. Submission of Documents: The completed share transfer deed or form, along with any required supporting documents such as the original share certificate(s) and identification documents, are submitted to the company or its registrar.
6. Verification and Registration: The company or its registrar verifies the documents and updates its share register to reflect the transfer of shares. The transferee becomes the new owner of the shares, and the transferor’s ownership rights are extinguished.

Transmission of Shares Process:

1. Notification: The legal representative of the deceased shareholder or the relevant authority notifies the company of the shareholder’s death or status change.
2. Probate or Letters of Administration (if applicable): If the deceased shareholder left a will, the probate (if applicable) or letters of administration issued by the court appointing an executor or administrator may need to be provided.
3. Transmission Application: The legal heirs or beneficiaries claiming ownership of the transmitted shares complete and submit a transmission application form provided by the company or its registrar.
4. Submission of Documents: The completed transmission application form, along with supporting documents such as the death certificate, probate or letters of administration, and identification documents of the legal heirs or beneficiaries, are submitted to the company or its registrar.
5. Verification and Registration: The company or its registrar verifies the documents and updates its share register to reflect the transmission of shares to the legal heirs or beneficiaries. The legal heirs or beneficiaries become the new owners of the shares, in accordance with applicable laws and regulations.
6. Distribution of Shares (if applicable): If the transmitted shares are distributed among multiple legal heirs or beneficiaries, the company may issue new share certificates or update electronic records accordingly.