Justify the following statement.
The Board of Directors can refuse transfer of shares.
Transfer of shares means voluntary transfer of shares by a member of a company in favour of another person. A member has to apply to the company for transfer of shares by filling the ‘Instrument of Transfer’ and submit the share certificate along with the required transfer fees. The board of directors may refuse registering the transfer under following conditions:
- When the provisions for transfer of shares as given in the Articles of Association is not fulfilled by the member.
- When the instrument of transfer is not as per the rules prescribed under the Companies Act.
- When the Instrument is not accompanied by the Share Certificate.
- When the company has a lien on the shares to be transferred.
Hence, the board of directors can refuse transfer of shares.