What is transfer of shares?


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Transferability of shares is an absolute right of the shareholder which cannot be denied even by the articles.

Section 82 empowers every shareholder to transfer his shares in the manner laid down in the articles and in accordance with the various provisions of the law.

Transfer of share in Private Company

A private company is statutorily under obligation to place certain restrictions on the right of its members to transfer shares. One of the restrictions on transfer of shares in a private company is the “Pre-emption Clause” which states that the transferor must offer his shares to the existing members of the company, before offering them to non-members, so long as a member is willing to purchase them at a fair price to be determined in accordance with the articles.

Transfer of shares in Public Company

In the case of public company also, there are some restrictions on the right of members to transfer shares. Regulation 21(Table A) provides that the board of directors may refuse to register the transfer to partly paid shares to a person of whom they do not approve. The board of directors may also refuse to register the transfer of any shares on which the company has a lien.

 


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