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Transfer of Shares in India - Form SH-4 Procedure Under Section 56 Companies Act 2013

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Section 56 Compliance: Form SH-4 (Share Transfer Deed) must be executed and lodged with the company within 60 days of execution

Stamp Duty: 0.25% of consideration for physical transfers; 0.015% for demat transfers (effective July 1, 2020)

New Certificate in 1 Month: New share certificate must be issued to the transferee within one month of board approval per Section 56(4)(c)

Rule 9B Demat Mandate: From June 30, 2025: non-small private companies must transfer shares only through the depository system (NSDL/CDSL)

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Overview What Is It Eligibility Our Services Process Documents Mistakes Fees Deadlines Why Us Transfer vs Transmission FAQs

Transfer of Shares - Overview

📌 TL;DR - Transfer of Shares Services at a Glance

Transferring shares in a private limited company requires executing Form SH-4, paying stamp duty, lodging the transfer deed within 60 days, obtaining board approval, and issuing a new share certificate within one month. Stamp duty: 0.25% physical / 0.015% demat. From June 30, 2025, non-small private companies must use demat only (Rule 9B). Cross-border transfers require FC-TRS on RBI FIRMS portal within 60 days. Starting at INR 2,999.

Transferring shares in a private limited company is more than exchanging share certificates. Section 56 of the Companies Act, 2013, mandates a specific procedure: executing Form SH-4 as the instrument of transfer, paying stamp duty, delivering the transfer deed to the company within 60 days, obtaining board approval, and receiving a new share certificate within one month.

A transfer without completing this legal process is not binding on the company and can expose both the transferor and transferee to disputes, tax consequences, and regulatory penalties. Patron Accounting handles the complete share transfer process - from Form SH-4 drafting and stamp duty payment to board resolution, register of members update, and new share certificate issuance.

Content is reviewed quarterly for accuracy.

What is Transfer of Shares?

Transfer of shares is the voluntary conveyance of title, rights, and obligations attached to shares from one person (transferor) to another (transferee). Shares in an Indian company are movable property under Section 44 and are freely transferable, subject to restrictions in the company's Articles of Association or Shareholders' Agreement.

Transfer vs Transmission: Transfer is a voluntary act using Form SH-4. Transmission occurs by operation of law (death, insolvency, inheritance) and does not require SH-4 or stamp duty - the legal heir submits succession documents instead.

Private companies commonly restrict transfers through pre-emption rights and Right of First Refusal (ROFR) clauses. The transferor must first offer shares to existing shareholders before transferring to an outsider.

Key Terms for Transfer of Shares:

Form SH-4 - Share Transfer Deed prescribed under Rule 11 of Companies (Share Capital and Debentures) Rules, 2014. Executed by both parties, stamped, and lodged within 60 days.

Stamp Duty - Physical: 0.25% of consideration (Article 62, Indian Stamp Act 1899). Demat: 0.015% auto-collected by NSDL/CDSL (Finance Act 2019).

Rule 9B - Non-small private companies must transfer shares only via depository (demat) system after June 30, 2025.

FC-TRS - FEMA form filed on RBI FIRMS portal within 60 days for cross-border (resident-NRI) share transfers.

ROFR - Right of First Refusal - AoA clause requiring existing shareholders be offered shares first before external transfer.

Section 56 Form SH-4

Eligibility and Pre-Transfer Checklist

Before initiating a share transfer, verify the following:

Shares must be fully paid-up - partly paid shares have additional requirements under Section 56(3) including Form SH-5 notice
AoA must not prohibit the transfer to the proposed transferee - check pre-emption and ROFR clauses
If AoA mandates ROFR, transferor must first offer to existing shareholders and obtain written refusals
For non-small private companies: shares must be in demat form; physical SH-4 not permitted post June 30, 2025 (Rule 9B)
For cross-border transfers (NRIs/foreign entities): comply with FEMA NDI Rules 2019, sectoral FDI limits, and FC-TRS
Share certificate numbers, distinctive numbers, and folio numbers must be correctly identified
No pending court order or NCLT injunction restraining transfer; any lien on shares must be discharged

Patron Accounting's Share Transfer Services

Service	What We Do
AoA Review and ROFR Process	Check pre-emption clauses, draft ROFR notices to existing shareholders, document refusals
Form SH-4 Drafting and Stamp Duty	Prepare transfer deed, calculate stamp duty (0.25% physical / 0.015% demat), assist with payment
Share Transfer Agreement	Draft agreement for high-value transactions with commercial terms, warranties, and indemnities
Board Resolution and Approval	Draft board resolution approving transfer at a duly convened Board Meeting
Register Update and New Certificate	Update Register of Members within 7 days; issue new share certificate (Form SH-1) within 1 month
FEMA / SBO Compliance	FC-TRS filing on RBI FIRMS portal for cross-border transfers; BEN-1/BEN-2 for SBO reporting

Our Process

9-Step Share Transfer Procedure

Under Section 56 of the Companies Act 2013. Form SH-4 must be lodged within 60 days. New certificate within 1 month. Penalty for default: INR 25,000 to INR 5,00,000 (company); INR 10,000 to INR 1,00,000 (officer).

Step 1

Check AoA and Pre-Emption Obligations

Review Articles of Association for transfer restrictions, ROFR, or pre-emption clauses. If present, transferor must first offer shares to existing shareholders with stipulated notice period (15-30 days).

AoA reviewedROFR cleared

AoA Checked01

Step 2

Execute Share Transfer Agreement

For transactions exceeding INR 5 lakh, execute agreement documenting consideration, payment schedule, representations, warranties, and conditions precedent.

Agreement signedTerms documented

Agreement Done02

Step 3

Execute Form SH-4 (Share Transfer Deed)

Both transferor and transferee sign Form SH-4 before a witness. Stamp duty must be affixed before or at time of signing - an unstamped SH-4 is invalid.

SH-4 executedWitness signed

SH-4 Ready03

Step 4

Pay Stamp Duty

Physical (SH-4): 0.25% of consideration or market value (whichever higher) - Article 62 Indian Stamp Act 1899. Demat: 0.015% auto-collected by NSDL/CDSL.

Duty paidStamps affixed

Duty Paid04

Step 5

Lodge SH-4 with the Company

Submit executed and stamped SH-4 to company's registered office with original share certificate, PAN/address proof, witness details, and ROFR waiver letters. Must be lodged within 60 days.

SH-4 lodged60-day deadline met

Lodged05

Step 6

Company Review and Board Approval

Company verifies completeness, stamp duty, signatures, and AoA compliance. Board resolution passed approving transfer. Refusal must be communicated within 30 days under Section 58.

Board approvedResolution passed

Approved06

Step 7

Update Register of Members

Cancel old certificate (mark 'CANCELLED'). Enter transferee in Register of Members within 7 days of board approval.

Updated07

Step 8

Issue New Share Certificate

New certificate in Form SH-1 issued to transferee within one month per Section 56(4)(c). No additional stamp duty on new certificate. Signed by two authorised signatories.

Certificate issuedTransferee is owner

Complete08

Documents Required for Share Transfer

Document	Notes
Form SH-4 (Share Transfer Deed)	Executed by both parties; stamped before/at signing; witness attestation mandatory
Original Share Certificate	Surrendered by transferor; cancelled by company on approval
Board Resolution	Approving the transfer at a valid Board Meeting
PAN Card of Transferee	Mandatory for KYC and stamp duty records
Address Proof of Transferee	Aadhaar, passport, utility bill, or bank statement
Share Transfer Agreement	For high-value transactions; documents commercial terms and warranties
ROFR Waiver Letters	From existing shareholders confirming they waive pre-emption rights, if AoA requires
Valuation Report (cross-border)	CA/Merchant Banker valuation for FEMA transfers; not more than 90 days old
Form FC-TRS (FEMA)	Filed on RBI FIRMS portal for resident-NRI or resident-foreign entity transfers
Succession Documents (transmission)	Death certificate + probate/succession/legal heir certificate (for transmission only)

Common Mistakes to Avoid in Share Transfers

Challenge	Impact	How Patron Accounting Solves It
Signing SH-4 before affixing stamp duty	Stamps must be affixed and cancelled before/at signing - otherwise SH-4 is invalid	Patron Accounting ensures stamp duty is paid and affixed correctly before execution
Lodging SH-4 after 60 days without indemnity	Company may reject or impose conditions for late lodgment	We track the 60-day deadline and lodge documents well within time
Physical transfer post June 30, 2025 for non-small companies	Rule 9B violation: INR 10,000 + INR 1,000/day penalty (cap INR 2,00,000)	We verify Rule 9B applicability and coordinate demat transfer where required
Missing FC-TRS for cross-border transfers	FEMA penalties up to 3x transaction amount	Our CA team manages FC-TRS filing on FIRMS portal within the 60-day window

Share Transfer Service Fees 2026

Fee Component	Amount
Domestic Share Transfer (Private Ltd)	INR 2,999 + GST (SH-4, stamp duty assistance, board resolution, register update, new certificate)
Cross-Border Transfer with FEMA Compliance	INR 7,999 + GST (SH-4, FEMA valuation, FC-TRS on FIRMS portal, board resolution)
Demat Transfer Coordination (Rule 9B)	INR 3,999 + GST (DP coordination, board resolution, register update, PAS-6)
Stamp Duty (Physical - Article 62)	0.25% of consideration or market value (whichever higher) - paid by transferor
Stamp Duty (Demat - Finance Act 2019)	0.015% of consideration - auto-collected by NSDL/CDSL - paid by transferee
Patron Accounting Professional Fees	Starting from INR 2,999 (Exl GST, Stamp Duty and Govt. Charges)

All fees and charges listed are indicative only and do not constitute a binding offer. Final amounts may vary depending on the volume of work and the complexity involved.

Professional service charges for drafting, filing, and representation are separate from the statutory fees. The exact fee depends on the complexity of the case, disputed amount, and number of hearings required. Contact us for a detailed quote.

Get a free Transfer of Shares consultation - Call +91 945 945 6700 or WhatsApp us. No-obligation assessment.

Share Transfer Deadlines and Timeline

Stage	Estimated Timeline
Lodge Form SH-4 with company	Within 60 days of execution (Section 56(1))
Board approval or refusal communication	Within 30 days of refusal (Section 58(1))
Issue new share certificate to transferee	Within 1 month of lodgment (Section 56(4)(c))
FC-TRS filing (cross-border transfers)	Within 60 days of transfer/remittance (FEMA NDI Rules 2019)
Register of Members update	Within 7 days of board approval
BEN-1/BEN-2 (SBO reporting)	BEN-1: 30 days; BEN-2: 30 days thereafter
Patron Accounting end-to-end	5-10 working days from document receipt (domestic transfers)

Penalty Warning: Failure to issue new share certificate within 1 month: Company INR 25,000 to INR 5,00,000; Officer INR 10,000 to INR 1,00,000 per Section 56(6). Physical transfer post June 30, 2025 (Rule 9B violation): INR 10,000 + INR 1,000/day continuing default.

Key Benefits

Why Choose Patron Accounting for Share Transfers?

End-to-End Process

AoA review, ROFR notices, SH-4 drafting, stamp duty, board resolution, register update, and new certificate issuance.

Correct Stamp Duty

Precise calculation for physical and demat transfers with verification of state-specific requirements.

FEMA Expertise

Cross-border transfers: FEMA valuation, FC-TRS filing on RBI FIRMS portal, and income tax withholding compliance.

Rule 9B Demat Coordination

Coordinate with NSDL/CDSL depository participants for Rule 9B-compliant companies post June 2025.

SBO Compliance

Complete register of members update and BEN-1/BEN-2 filing where Significant Beneficial Ownership is triggered.

Pan-India Service

Transparent fee starting at INR 2,999 - no hidden charges. Offices in Pune, Mumbai, Delhi, Bangalore.

Why Clients Trust Patron Accounting

300+ Share Transfers Completed | 100% Penalty-Free Filings | FEMA and NCLT Expertise | CA and CS Team with 15+ Years Experience

Transfer vs Transmission of Shares

Parameter	Transfer	Transmission
Nature	Voluntary act by shareholder	By operation of law (death, insolvency, inheritance)
Form Required	Form SH-4 (Share Transfer Deed)	No SH-4; succession documents required
Stamp Duty	Applicable (0.25% physical / 0.015% demat)	Not applicable - no consideration
Consideration	Typically money or money's worth	No consideration
Initiated By	Transferor (seller)	Legal heir, nominee, executor
Documents Needed	SH-4, share certificate, PAN, address proof	Death certificate, succession/probate certificate
AoA Restrictions	Apply - pre-emption, ROFR	May not apply to legal heirs

Related Corporate Compliance Services

Issue of Shares - rights issue, bonus shares, and private placement
Increase in Authorised Share Capital - SH-7 and MOA amendment
Annual ROC Compliance - MGT-7, AOC-4, Director KYC
Private Limited Company Registration - new incorporation
Change in Shareholders and Directorship - director appointment, resignation

Legal Framework - Section 56 and Related Provisions

Provision	Requirement
Section 44, CA 2013	Shares are movable property; transferable in manner provided by AoA.
Section 56(1)	Instrument of transfer in Form SH-4; must be lodged within 60 days of execution.
Section 56(4)(c)	New share certificate within 1 month from receipt of transfer instrument.
Section 56(6)	Penalty for default: Company INR 25,000-5,00,000; Officer INR 10,000-1,00,000.
Section 58	Refusal to register transfer communicated within 30 days; appeal to NCLT.
Rule 11, SC&D Rules 2014	Prescribes Form SH-4 as standard instrument for physical share transfer.
Article 62, Indian Stamp Act	Stamp duty on physical share transfer: 0.25% of consideration/market value.
Finance Act 2019 (eff. 01.07.2020)	Stamp duty on demat transfers: 0.015% collected by depository.
Rule 9B, PAS Rules 2014	Non-small private companies: demat-only transfers from June 30, 2025.
FEMA NDI Rules 2019	FC-TRS on RBI FIRMS portal within 60 days for resident-NRI/foreign entity transfers.

External Authority Link: MCA Portal - Forms and Filing

Frequently Asked Questions - Transfer of Shares

Get answers about Form SH-4, stamp duty, transfer vs transmission, FEMA compliance, and share transfer deadlines.

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What is Form SH-4 and when is it used?

Form SH-4 is the Share Transfer Deed under Rule 11 of Companies (Share Capital and Debentures) Rules 2014. Used to transfer physical shares under Section 56. Both parties sign before a witness with stamp duty affixed. After June 30, 2025, non-small private companies use demat instead of SH-4.

What is the stamp duty on transfer of shares in India?

Physical transfers (SH-4): 0.25% of consideration or market value, whichever higher, under Article 62 Indian Stamp Act 1899. Transferor pays. Demat transfers: 0.015% auto-collected by NSDL/CDSL, paid by transferee. Uniform rate effective July 1, 2020 under Finance Act 2019.

How long does the company have to issue a new share certificate?

Under Section 56(4)(c), the company must deliver the new share certificate within one month of lodgment of the transfer instrument. Failure attracts penalty of INR 25,000 to INR 5,00,000 for the company and INR 10,000 to INR 1,00,000 per officer under Section 56(6).

What is the difference between transfer and transmission of shares?

Transfer is voluntary using Form SH-4. Transmission occurs by operation of law (death, insolvency) without the shareholder's consent. Transmission requires succession documents, not SH-4, and no stamp duty is payable.

Can a private company refuse to register a share transfer?

Yes, but only on grounds permitted by law or AoA - non-compliance with ROFR, lien on shares, defective documentation, or court order. Under Section 58, refusal must be communicated within 30 days with reasons. The aggrieved party may appeal to NCLT.

What FEMA filing is required for cross-border share transfers?

Form FC-TRS must be filed on RBI FIRMS portal within 60 days of transfer or receipt of consideration, whichever earlier, under FEMA NDI Rules 2019. Requires fair market value certificate, KYC, and board resolution. Failure attracts FEMA penalties up to 3x the transaction amount.

What is the 60-day rule for Form SH-4?

Under Section 56(1), Form SH-4 must be delivered to the company within 60 days from execution. If not lodged within 60 days, the board may still register on terms it thinks fit - typically requiring an indemnity bond.

Quick Answers

What form is used? Form SH-4 for physical transfers. Demat transfers use depository system (NSDL/CDSL) - no physical SH-4.

Stamp duty rate? Physical: 0.25% (Article 62 Indian Stamp Act). Demat: 0.015% (Finance Act 2019). Demat is 16x cheaper.

Can company refuse? Only on AoA-permitted or legal grounds. Must communicate refusal within 30 days under Section 58. Appeal to NCLT available.

Gift transfer stamp duty? Off-market gifts without consideration may not attract stamp duty per GOI FAQs. SH-4 still required with consideration shown as 'Nil'.

Transfer Shares Legally - Avoid Penalties and Disputes

Key Deadlines:

60 days: Form SH-4 must be lodged with company after execution
1 month: New share certificate must be issued after board approval - penalty INR 25,000 to INR 5,00,000 for default
30 days: Refusal to register must be communicated - otherwise deemed approved
60 days: FC-TRS filing for cross-border transfers - FEMA penalty up to 3x transaction amount
Rule 9B: Physical SH-4 transfers no longer valid for non-small private companies from June 30, 2025

Call +91 945 945 6700 or WhatsApp us for a free consultation on your share transfer.

Transfer Shares Legally - Starting at INR 2,999

Share transfer under Section 56 of the Companies Act 2013 requires precise execution of Form SH-4, correct stamp duty, timely lodgment, board approval, and new certificate issuance. With Rule 9B mandating demat transfers for most private companies from June 2025, the compliance landscape has changed significantly.

Patron Accounting's CA and CS team manages the entire process end-to-end - from AoA review and ROFR notices to stamp duty, board resolution, register update, new certificate, and FEMA/SBO filings where required. 300+ share transfers completed with 100% penalty-free record.

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Content Created: March 2026 | Last Updated: 20 April 2026 | Next Review: March 2027 | Reviewed By: CA & CS Team, Patron Accounting LLP

This page is reviewed annually. Trigger: Indian Stamp Act rate changes, Rule 9B demat provisions, FEMA NDI amendments, or MCA form updates.