Transfer and Transmission of Shares

Transfer and Transmission of Shares: One of the most essential characteristics of the securities is that they are transferable, making it easier for the firm to get permanent capital and liquid investments for its shareholders. A member’s voluntary act of transferring shares occurs via a contract. It is not the same as stock transfer since the two have different meanings and concepts. The transfer of shares happens as a result of the operation of law, i.e. when a member dies or becomes insolvent/lunatic.

Transfers of Stock

The purposeful transfer of title (rights and obligations) to shares from one person to another is referred to as a transfer of shares. When it comes to stock transfers, there are two parties involved: the transferor and the transferee.

Unless the articles of organisation include an explicit limitation, the public company’s shares are freely transferable. The corporation, on the other hand, has the right to deny a share transfer if it has a good cause for doing so. A limitation on the transfer of shares exists in the event of a private firm, subject to specific circumstances.

Shares are transferred.

There are various instances when a transfer of shares happens by operation of law, such as when the registered shareholder is deceased, bankrupt, or insane. When a company’s shares are held by it and it is wound up, the shares are also transmitted.

The shares are given to the deceased’s legal agent and the insolvent’s official assignee. When the transferee provides evidence of share entitlement, the corporation records the transmission.

Differences between Transfer and Transmission of Shares

The term “transfer of shares” refers to the voluntary transfer of shares from one party to another. The term “transmission of shares” refers to the transfer of shares that occurs as a result of the operation of legislation.

Death, bankruptcy, and insanity are the reasons for the transmission of shares, while death, bankruptcy, and insanity are the reasons for the transmission of shares.

The parties to the transfer, i.e. the transferor and transferee, begin the transfer of shares. Unlike the transference of shares, which is started by the member’s legal agent.

For the transfer of shares, the transferee pays a sufficient compensation to the transferor. There must be no consideration given in the event of the transference of shares.

When there is a transfer of shares, but not when there is a transmission of shares, a legal transfer deed is required.

The transferor’s responsibility ends when the transfer is accomplished. The original liability of shares, on the other hand, survives.

In the event of a transfer, stamp duty is due on the market value of the shares, but in the case of a transmission, no stamp duty is due.

By and large, the transfer of shares is the standard method of transferring property, while the transmission of shares occurs only in the event of the shareholder’s death or bankruptcy. Furthermore, although the transfer of shares is fairly frequent, the transmission of shares occurs only when a certain event occurs.

Transfer and Transmission of Shares