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Transfer vs. Transmission of Shares

Transfer of shares involves the voluntary transfer of shares between parties, where an instrument of transfer is required and stamp duty is paid. Transmission of shares occurs due to operation of law upon certain events like death or insolvency, where shares pass to the legal heir without consideration or stamp duty. The key difference is that transfer of shares is voluntary while transmission is involuntary occurring by operation of law.

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77 views2 pages

Transfer vs. Transmission of Shares

Transfer of shares involves the voluntary transfer of shares between parties, where an instrument of transfer is required and stamp duty is paid. Transmission of shares occurs due to operation of law upon certain events like death or insolvency, where shares pass to the legal heir without consideration or stamp duty. The key difference is that transfer of shares is voluntary while transmission is involuntary occurring by operation of law.

Uploaded by

Karam Vir Singh
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Difference between Transfer of Shares and

Transmission of Shares
(1) Transfer of Shares:

 Meaning: Transfer means transferring the shares on the name of some other person on a
voluntary basis.

 Initiative: The transfer-or and transferee takes initiative.

 Nature of Action:It is a deliberate action taken by a share holder.

 Parties: There are two parties i.e. transfer-or and transferee to the transfer of shares.

 Documents Required: An instrument of transfer has to be duly executed by the transfer-


or and transferee.

 Stamp Duty: It is payable on the market value of shares.

 Right of Refuse: The directors of the company can refuse transfer of shares on certain
grounds.

 Consideration: There must be an adequate consideration for the transfer of shares,


unless they are transferred by way of gift.

(2) Transmission of Shares:

 Meaning: Transmission of shares means the passing of property or title in shares by the
operation of law from a member to his legal representative on the happening of a certain
event like death, insolvency or lunacy.

 Initiative: The legal heir of the deceased share holder takes the initiative.

 Nature of Action: It is not deliberate action of a shareholder, but the result of operation
of law, after he dies or becomes insane or bankrupt.

 Parties: The legal heir of the deceased share holder is involved.


 Documents Required: Certain documents like court order of insolvency, death
certificate are required for transmission of shares.

 Stamp Duty: No stamp duty is payable for transmission of shares.

 Right of Refuse: Transmission of shares can't be refused, it is under operation of law.

 Consideration: The question of consideration does not arise in the case of transmission
of shares, as it is due to the operation of law.

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