Meaning: -one of the
important features of the joint stock company is that its shares are
transferable. Section 82 empowers every shareholder to transfer his shares in
the manner laid down in the Articles and in accordance with the various
provision of law. A transfer of shares takes place when a registered
shareholder transfers his shares by sale or otherwise to another person
voluntarily.
Statutory
provision regarding transfer of shares:
1.
Instrument of
transfer (sec.108): -An application for transfer of shares must be
submitted in the prescribed form called as instrument of transfer. It must be
duly filled, stamped and signed by transferor and transferee. The instrument of
transfer should be submitted in company's office along with share certificate.
2.
Transfer by legal
representatives (sec.109): -In case of deceased member, a transfer executed
by the legal representative of deceased member is valid.
3.
Application for
transfer (sec.110): -An application for the registration of a transfer
of the share may be made either by the transferor or by the transferee.
Transferor is the shareholder who wants to transfer shares. Transferee is the
one in whose favour shares are transferred.
4.
Power to refuse
transfer (sec. 111): - Directors have right to refuse transfer of
shares. The right of transfer is restricted by the Articles on the following
grounds.
a) When
the transferee is a minor.
b) When
a company has a lien on the shares, to recover any amount payable by the
shareholder to the company.
c) When
the intention of the transferee is malafide i.e. he wants to take transfer of
large number of shares with the object of controlling the management.
d) When
the Central Government gives a direction to the company not to give effect to
the transfer of shares.
e) When
the instrument of transfer is incomplete.
5.
Time limit for
issue of share certificates: -
Every company
has to issue share certificate within two months from the date of registration
of the transfer of shares.