4 Common Mistakes to Avoid With Share Transfer Process

Share Transfer Process involves the formal process of transferring ownership of shares from one shareholder to another. While the process itself is usually straightforward, businesses commonly run into avoidable issues along the way. Here are the mistakes we see most often, and how to steer clear of them.

Mistake 1

Skipping proper valuation, especially for related-party or related-entity transfers.

Mistake 2

Not paying the correct stamp duty on the transfer deed.

Mistake 3

Forgetting to update the register of members after the transfer.

Mistake 4

Ignoring restrictions on transfer under the Articles of Association.

How to Avoid These Issues

Most of these mistakes come down to preparation. Having the right documents ready — Share transfer deed (Form SH-4), Board approval of the transfer, where required, Valuation of shares, especially for related-party transfers, among others — and understanding the process before you start goes a long way toward a smooth outcome with the company's board, as per its Articles of Association and applicable MCA norms.

Quick Reference: What You'll Need

• Share transfer deed (Form SH-4)
• Board approval of the transfer, where required
• Valuation of shares, especially for related-party transfers
• Updated register of members