Can a company refuse to register a share transfer?

The Board of Directors of a company whose shares are not listed on any stock exchange or a private limited company can refuse to register transfer of shares in favor of any person in terms of the provisions of Articles of Association of the company.

WHEN CAN board of directors refuse transfer of shares?

The board of directors may refuse registering the transfer under following conditions: When the provisions for transfer of shares as given in the Articles of Association is not fulfilled by the member. When the instrument of transfer is not as per the rules prescribed under the Companies Act.

What are the circumstances under which a company may refuse to register transfer of shares?

In case due call money has not been paid by the transferor. When the transferor is a debtor of the company, and the company has a lien on such shares. If instrument is incomplete, irregular and defective, and not properly stamped. On other reasons, just and equitable and are in the general interests of the company.

Who has right to refuse transfer of shares?

If a private limited company refuses to register the transfer of shares, it shall send a notice of refusal to the transferor and the transferee or to the person giving intimation of such transfer within thirty days from the date on which the instrument of transfer was delivered to the company.

Can directors refuse to transfer shares?

The directors can refuse to register a transfer. If they do so, they must return the stock transfer form with a notice giving their reasons for refusing it (unless the directors suspect that the proposed transfer is fraudulent).

Under what circumstances a company can transfer its share?

Only restriction contained the Articles of Association are considered legally binding. Any private agreement between the shareholders are not binding either on the company or on the shareholders. Further, share transfer can only be restricted by the Articles of Association.

Are shares of private company freely transferable?

According to the Companies Act, the right to transfer shares is restricted by its articles. Only a public limited company has the right to transfer shares freely. Thus, shares of Private Limited company are not freely transferable.

What is the procedure to transfer shares?

How to Transfer Shares of a Private Limited Company

1. Step 1: Obtain share transfer deed in the prescribed format.
2. Step 2: Execute the share transfer deed duly signed by the Transferor and Transferee.
3. Step 3: Stamp the share transfer deed as per the Indian Stamp Act and Stamp Duty Notification in force in the State.

Which companies is shares Cannot be transferred?

Share Transfer Limitations in AOA: A private limited company, like a Partnership company, is known to be a “closed organization” of shareholders. Therefore, the Articles of Association (AOA) may limit the transfer of shares to a Private Limited Company.

Are shares of a private company freely transferable?

Do directors have to approve share transfers?

The company must accept the transfer unless there is some provision in its articles which restricts transfers or gives the board a discretion to decline them.

Can directors Approve Share transfer?

transfers of shares by existing shareholders of a company are not effective until the transfer is registered by directors; and. directors may refuse to register transfers of shares in the company for any reason.

Can a board of directors refuse to register shares?

The Board of Directors of a company whose shares are not listed on any stock exchange or a private limited company can refuse to register transfer of shares in favor of any person in terms of the provisions of Articles of Association of the company.

What happens if a director refuses to transfer a share?

If the directors refuse to register the transfer of a share , they shall within two months after the date on which the transfer was lodged with the company send to the transferee notice of the refusal. 26.

Do you need a notice of refusal to register a share?

There is no requirement for the notice to be accompanied by the reasons for refusal to register the transfer.   The existing provision for shares is essentially restated in Clause 4.19of the CB.

What happens if a company refuses to register a transfer?

The transferor or transferee are entitled to appeal to the National Company Law Tribunal against any refusal of the company to register the transfer or against any failure on its part within the period of two months either to register the transfer or to send notices of its refusal to register the same.