Share transfer in a private company: the steps in orderप्राइभेट कम्पनीमा शेयर नामसारी

Selling shares in a private company is more than a sale deed. The Articles usually give other shareholders the first right to buy, the board must approve the transfer, and OCR must record it.

The steps

1. The seller gives notice to the company and the other shareholders
2. The other shareholders waive their right to buy first, or buy
3. The board approves the transfer (Sections 42 and 44)
4. Seller and buyer sign the sale deed, attested by a notary
5. The company works out and deposits advance tax on the seller's gain
6. The Schedule 22 application is filed with OCR
7. The board registers the transfer within 15 days (Section 43), cancels the old certificate and issues the new one
8. The share register and beneficial owner details are updated

The 15-day rule

The company must register the transfer within 15 days. Late registration is the most common problem we see, usually because the deed was signed before the tax and the board papers were ready.

Tax

Tax on the seller's gain is collected by the company and deposited before OCR records the transfer. The rate depends on who the seller is; Nexus Advisory Services can advise on it.

General information, not legal advice. Rules change; we check the current position for your case before filing. Legal documents are drafted under the supervision of our retained, licensed advocate.