The Difference Between Transfer and Transmission of Shares and Debentures

The word “transfer” is an act of the parties by which title to property is transferred from one person to another. (Person also includes legal person e.g. company, body corporate, etc.)

The word transmission is referred to transfer of title to parties by operation of law.

Transfer of shares means a voluntary passing of property in certain shares from one person to another by presenting to the company a duly stamped and executed instrument of transfer, by or on behalf of the transferor and transferee containing their names, addresses and occupations along with the share certificates relating to the shares to be transferred, whereas transmission on the other hand, involves the passing of the property in shares by operation of law on the happening of such events such as death, insolvency or lunacy of a shareholder/debentureholder etc.

A share or debenture transfer is a procedure by which an existing shareholder or debenture holder transfers his/her share(s) or/and debenture(s) to an existing shareholder(s), or to any one else depending upon the transaction and circumstances of the case.

Under the law anyone has a right to transfer his / her share(s) or / and debenture(s) to any existing one or anyone else; however a private company may by its articles of association (AOA) restrict the right to transfer the company’s shares provided that all the relevant provisions of the Ordinance and AOA of the company are complied with and due procedure is followed.

Provisions of Law Relating To Transfer & Transmission of Shares or/and Debentures:

Sections 74 to 81 of the Ordinance deal with issues governing the transfer and transmission of shares or / and debentures.

Limitation on Transfer of Shares and Debentures:

Every company has to transfer the shares, debentures or debentures stock within forty five days of application.

The company shall within 30 days or where the transferee is a central depositary company within five days from the date on which the instrument of transfer is lodged with the company, will notify the defect or invalidity to the transferee who shall after removing the identified defect shall re-lodge the transfer deed with the company.

These conditions, in relation to a private limited company shall be subject to such limitations and restrictions as imposed by its AOA, if any.

 

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