Company Share Transfer

Last updated: 14 Oct 2026

Share transfer in a private company requires: board approval (per AOA restrictions), SH-4 (share transfer form) signed by transferor and transferee, share certificates surrendered and new ones issued, register of members updated. If foreign investor is involved, FEMA compliance (FC-TRS, valuation certificate) applies. Stamp duty varies by state. Virtual Auditor handles the complete transfer process including FEMA compliance where applicable. Quick Answer: Company Share Transfer — Company Share Transfer by CA/CS firm. Companies Act compliance. Expert filing and advisory. Virtual Auditor.

Company Share Transfer is a service offered by Virtual Auditor, an AI-powered CA and IBBI Registered Valuer firm (IBBI/RV/03/2019/12333) led by CA V. Viswanathan (FCA, ACS, CFE, IBBI RV), specialising in statutory compliance and corporate restructuring, from offices in Chennai, Bangalore, and Mumbai since 2012.

Source: Companies Act 2013, Companies (Management and Administration) Rules 2014 Official References: MCA Filing ↗ · Companies Act ↗

Regulatory Framework

Regulatory basis: Companies Act, 2013 — Sections 92 (Annual Return), 137 (Financial Statements), 139 (Auditor), 149 (Directors), 173 (Board Meetings).

Share Transfer — Pvt Ltd vs Public Ltd

ParameterPrivate LtdPublic Ltd
RestrictionAOA restrictions applyFreely transferable
Board approvalRequiredNot required
Stamp duty0.015% of consideration0.015% of consideration
FormSH-4 + board resolutionStock exchange transfer

People Also Ask

What happens if ROC annual filing is late?

Penalty of ₹100/day per form (AOC-4 and MGT-7 separately) with no maximum cap. Persistent non-filing can lead to company strike-off and director disqualification under Section 164(2).

Is statutory audit mandatory for all companies?

Yes for all companies registered under the Companies Act, 2013. For LLPs: only if turnover exceeds ₹40 lakhs or contribution exceeds ₹25 lakhs.

How Virtual Auditor Delivers This Differently

Our compliance management platform tracks every statutory deadline across all your entities — board meetings, AGM, ROC filings, tax returns, GST returns, TDS deposits. Automated reminders sent 30, 15, and 7 days before each deadline. No penalty surprises.

Need Help With This?

Free 30-minute consultation with CA V. Viswanathan, FCA, ACS, CFE, IBBI RV. No obligation.

What You Will Receive

Upon completion, you will receive: share transfer deed (SH-4) executed by transferor and transferee, Board Resolution approving the transfer, updated Register of Members reflecting new shareholding, new share certificates issued to the transferee, stamp duty computation and payment challan, and Form PAS-3 filing with ROC (for allotment) or MGT-14 (for board resolution). Capital gains tax computation provided for the transferor's income tax filing.

Latest Regulatory Updates (FY 2025-26)

This page has been updated to reflect changes introduced in Budget 2025, recent notifications from CBDT, CBIC, MCA, SEBI, and RBI, and evolving compliance requirements for FY 2025-26. Virtual Auditor continuously monitors regulatory developments to ensure all advice and filings are current and compliant with the latest provisions.

Recent Engagement — How We Helped

Context: a group of 4 co-founders launching an AI-powered fintech startup in Bangalore.

Challenge: The founders needed to incorporate quickly to sign a term sheet with an angel investor, but had complex requirements — one NRI director, customised Articles of Association with vesting clauses, and simultaneous DPIIT startup recognition for tax benefits.

Our approach: We handled end-to-end incorporation using SPICe+ (INC-32), securing DSC for all 4 directors including the NRI (using foreign address attestation), drafted customised MOA/AOA with founder vesting and anti-dilution provisions, and filed DPIIT recognition immediately post-incorporation.

Outcome: Certificate of Incorporation received in 6 working days. PAN/TAN/GST registration allotted simultaneously through SPICe+. DPIIT recognition approved within 48 hours of incorporation. The angel round closed within 3 weeks of engagement.

When Is Company Share Transfer Not Required?

Share transfer may not be required when: (a) shares are being transmitted by operation of law (death or succession — use Form SH-4 for transmission, not transfer), (b) the Articles of Association restrict transfer and board approval is unlikely, (c) the transfer is being done solely for tax planning without genuine change in beneficial ownership (may attract GAAR provisions), or (d) the shares are subject to lock-in under FEMA/SEBI regulations. For Pvt Ltd companies, pre-emptive rights and transfer restrictions in the Articles must be checked before proceeding.

If you are unsure whether your situation requires company share transfer, contact us for a free preliminary assessment. We will advise you honestly — including telling you if you do not need our services.

What has changed in the law — reviewed October 2026

  • Income-tax Act, 2025: assented to on 21 August 2025 and in force from 1 April 2026, it replaces the Income-tax Act, 1961 for tax year 2026-27 onward, and the Income-tax Rules, 2026 (notified 20 March 2026) replace the 1962 Rules. Section and rule numbers on this page are those of the 1961 Act and 1962 Rules, which continue to govern assessments, appeals and pending proceedings for assessment years up to 2026-27; for tax year 2026-27 onward the corresponding provisions of the 2025 Act apply, and our engagement letters quote both.

Step-by-Step Process

2

Step 2

Pay stamp duty (0.015% of consideration)

3

Step 3

Board passes transfer resolution

4

Step 4

Cancel old share certificates

5

Step 5

Issue new share certificates within 30 days

Which laws govern this service? — Company law

The statutory provisions this service is delivered under, linked to the official text:

Documents Required

The following documents are needed to initiate the company share transfer process:

PAN card and Aadhaar of all proposed directors/partners/members, passport-size photographs, proof of registered office address (rent agreement + NOC + utility bill, or ownership proof), Digital Signature Certificate (DSC) for all directors/designated partners, Director Identification Number (DIN) or application for allotment, draft constitutional document (MOA/AOA/LLP Agreement/Trust Deed), declaration and consent from directors/partners (Form INC-9/DIR-2), and professional certificate from a practicing CA/CS/Advocate.

We provide a personalised document checklist after the initial consultation, tailored to your specific entity type and situation. Documents can be shared securely via email or our client portal.

Frequently Asked Questions

Is stamp duty payable on share transfer?

Yes. Stamp duty on share transfer varies by state — typically 0.015% to 0.25% of consideration. Off-market transfers of dematerialised shares: 0.015%.

What if the transfer is to a foreigner?

FEMA compliance required: a fair-value certificate (any internationally accepted method), pricing at or below the ceiling (for outbound), FC-TRS filing within 60 days.

How to transfer shares of a private limited company?

Execute share transfer deed (SH-4). Board passes transfer resolution. Company issues new share certificates within 30 days. Stamp duty: 0.015% of consideration or market value. File MGT-14 if Articles restrict transfer.

Is stamp duty applicable on share transfers?

Yes. 0.015% (15 paisa per ₹100) of consideration or market value, whichever is higher. Payable by the transferee. For demat shares, stamp duty is collected at the depository level.

Can directors restrict share transfer?

Private companies can restrict share transfer through Articles of Association. Common restrictions: board approval, right of first refusal to existing shareholders, lock-in periods. Board cannot unreasonably refuse transfer.

Is valuation needed for share transfer?

Required when transfer is between related parties, for FEMA compliance (resident to non-resident or vice versa), and for Income Tax purposes (Section 56(2)(x) — transfer below fair market value). IBBI Registered Valuer recommended.

How is fair market value determined for share transfer?

Rule 11UA of Income Tax Rules: DCF method or NAV method for unlisted companies. For FEMA: internationally accepted pricing methodology (usually DCF). We provide multi-framework valuation covering both requirements simultaneously.

How do I make this corporate change correctly, and what approvals and records are needed?

Start with what the change is and what your articles of association say. Most changes need a board resolution, and some need the shareholders: a change of name, a shift of registered office to another state or an alteration of the articles needs a special resolution, which is filed in Form MGT-14 within 30 days. Each change has its own ROC form: DIR-12 within 30 days for appointing or removing a director (the new director needs a DIN and gives consent in DIR-2), SH-7 for an increase in authorised capital, INC-22 for a change of registered office. Afterwards, update the statutory registers, the bank and GST records, and your letterhead. We check the prerequisites, draft the resolutions and file the forms.

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