Transfer of Shares in Private Limited Company – Process, Stamp Duty & Compliance (2026)

Form SH-4 is the statutory instrument of transfer for shares in a company, as prescribed under the Companies Act, 2013.

As of 2026, the stamp duty rate is fixed at 0.015% of the total consideration value or market value of the shares being transferred.

Yes. The Board of Directors has the discretion to refuse a transfer if it violates the Articles of Association or is against the company’s interests.

It is a common clause in AoA that requires a shareholder to first offer their shares to existing members before selling them to an outsider.

A standard transfer can be completed in 7–10 days, depending on the speed of board approval and stamp duty payment.

No. The change is recorded internally in the Register of Members immediately. Formal notification to the ROC happens via the Annual Return (MGT-7).

They are either endorsed with the name of the new owner on the back or cancelled, and new certificates are issued.

No. Even in the case of a gift, stamp duty at the rate of 0.015% is applicable on the fair market value of the shares.

MGT-1 is the statutory Register of Members. Any change in shareholding must be recorded in this register within 7 days of board approval.

Transfer is a voluntary act (sale/gift) requiring SH-4 and stamp duty. Transmission is an involuntary act (death/insolvency) occurring by law, requiring no SH-4 or stamp duty.

The transferor is liable to pay Capital Gains Tax on the difference between the sale price and the cost of acquisition of the shares.

Yes, but the minor cannot be the signatory. The shares must be transferred through a natural or legal guardian who will manage the interest until the minor reaches maturity.

Under Section 56, the company must deliver the endorsed or new share certificates within one month from the date of receipt of the transfer deed.

If shares of a private company are transferred at a price lower than the Fair Market Value (FMV), the difference is treated as taxable income for the transferee.

Yes, but the company must give 2 weeks' notice to the transferee to ensure they are aware of the pending liability on the shares.

It gives the Board the right to refuse a transfer for "sufficient cause." However, the transferee has the right to appeal this refusal in the NCLT.

The shareholder must first apply for "Duplicate Share Certificates" by filing an indemnity bond and FIR, before the transfer can be processed.

Yes. In a One Person Company, the sole member can transfer their shares to another individual, who then becomes the new sole member and director.

It is the reporting form filed with the RBI (via FIRMS portal) for the transfer of shares between a resident and a non-resident.

For cross-border transfers, Form FC-TRS must be filed within 60 days of the remittance of funds or the date of transfer, whichever is earlier.

Generally no, unless the AoA explicitly allows it for specific reasons. Board discretion is primarily intended for transfers to outsiders.

Under Section 56(2)(x), if shares are transferred at a price significantly below the Fair Market Value (FMV), the difference is treated as a taxable gift for the receiver.

FMV is typically calculated using the "Net Asset Value (NAV)" method or "Discounted Cash Flow (DCF)" method by a Registered Valuer or Chartered Accountant.

If a company fails to update the Register of Members after an approved transfer, the aggrieved party can apply to the NCLT for rectification of the Register.

No. Any transfer of shares made after the commencement of winding up of a company is void unless approved by the Liquidator or the Tribunal.

Yes. The signatures of both the transferor and the transferee on the SH-4 deed must be witnessed by an independent individual.

Yes. Directors can purchase shares from other members, provided they disclose their interest if required and follow the pre-emption rights in the AoA.

The transfer deed becomes legally invalid and inadmissible as evidence. The company is also liable for penalties for recording a transfer based on an unstamped instrument.