Question

Justify the following statement:

A shareholder of a public company can transfer shares.

Answer 1

1. When a registered shareholder willingly gives or sells their shares to another person, it is called a transfer of shares.
2. Shares cannot be transferred just by handing them over. The transfer must follow the procedure laid down in the Companies Act and the company’s Articles of Association, which may also include certain restrictions. The process is completed by registering a document known as the Instrument of Transfer with the company.
3. The request to transfer shares can be made using a prescribed printed form, either by the person transferring the shares (transferor) or the person receiving them (transferee). This form must be signed by both parties and a witness. The completed, signed, and stamped form must be submitted to the company along with the original share certificate.
4. If the shares being transferred are partly paid-up, the company must inform the transferee that they are accepting partly paid shares by issuing a notice to them.