Quick answer
How do you do a share transfer in a private limited company?
For a share transfer in a private limited company, the seller and buyer sign form SH-4, pay stamp duty of 0.015% of the consideration, and deliver the deed with the share certificate to the company within 60 days. The board approves the transfer under the articles, and the company issues endorsed certificates within one month.
- Form SH-4 for physical shares
- Stamp duty 0.015% of consideration since 1 July 2020
- Deed reaches company within 60 days of signing
- Certificates within one month of receiving the deed
- No MCA form filed for a plain transfer
What is a share transfer and who needs one?
A share transfer is the voluntary sale or gift of shares that already exist, from a current shareholder to a new or existing one. It changes who owns the company without changing its capital. It is different from transmission, which happens by law on death or insolvency, and from a fresh allotment, where the company issues new shares.
Typical Delhi cases we see:
- A co-founder exits and sells their stake to the remaining founder.
- A parent gifts shares to children as part of succession planning.
- An investor buys shares from promoters rather than putting new money into the company.
- Nominee shares held by a friend at incorporation move back to the real owner.
- A whole company changes hands and both shareholders sell to a new group.
When a shareholder who exits is also a director, the transfer usually goes alongside a change of directors. If the buyer wants new shares instead, that is an allotment, and it may need an increase in authorised capital first.
What are the rules for share transfer in private limited company?
Share transfer in a private limited company is restricted by its articles of association, which by law must limit the right to transfer. Most articles give existing shareholders a right of first refusal and need board approval. Under section 56 the company registers a transfer only on a properly stamped, signed and dated instrument.
Read the articles before anyone agrees a price. Common clauses include:
- Pre-emption. The seller must first offer shares to existing members at a stated price.
- Board discretion. The board may refuse a transfer to an outsider. Section 58 requires notice of refusal with reasons within 30 days of receiving the deed, and the buyer can appeal to the NCLT within 30 days of that notice, or 60 days from delivery if no notice was sent.
- Shareholder agreement terms. Investor agreements often add tag-along, drag-along and lock-in clauses.
Demat check: under Rule 9B of the Prospectus and Allotment of Securities Rules, private companies other than small companies must have their shares in demat form, and a holder transferring after the company's compliance date must dematerialise first. Small companies can still use the physical SH-4 route.
Need help with share transfer? Talk to a chartered accountant in Delhi today. First call is free.
What documents are needed for a share transfer?
For a share transfer you need form SH-4 signed by both parties and a witness, the original share certificate, stamp duty proof, PAN and identity proof of the buyer, a board resolution approving the transfer, and where relevant a valuation report, a no-objection from other members, and the shareholder agreement.
Documents for a share transfer in a private company| Document | Who provides it | Why it is needed |
|---|
| Form SH-4 (securities transfer form) | Seller and buyer, with witness | The instrument of transfer under Rule 11 |
| Stamp duty payment proof (e-stamp or share transfer stamps) | Normally arranged by the seller | Unstamped deeds cannot be registered |
| Original share certificate | Seller | Endorsed in the buyer's name or replaced |
| PAN, address proof, email and phone of buyer | Buyer | Register of members and annual return |
| Waiver or no-objection under pre-emption clause | Other shareholders | Shows the articles were followed |
| Board resolution approving the transfer | Company | Records the decision and authorises endorsement |
| Valuation report, if price is set by fair value | Valuer | Supports the price for tax and FEMA purposes |
Checklist prepared by CA in Delhi from section 56 and Rule 11 of the Share Capital and Debentures Rules, November 2026.
How does the share transfer process work: step by step
The sequence protects both sides: price and approvals first, stamp duty before signing, and the company's records last. Skipping the articles check is the most common reason a transfer is challenged years later.
- 1
Read the articles and agreements
We check pre-emption, board approval and any lock-in in the articles and shareholder agreement.
- 2
Fix the price
The parties agree a price; where it is near or below fair value, a valuation report is arranged first.
- 3
Offer to existing members
If the articles require it, the seller offers the shares to other members or collects their written waiver.
- 4
Pay stamp duty
Stamp duty of 0.015% of the consideration is paid before or at execution of the deed.
- 5
Sign SH-4
Seller and buyer sign form SH-4 before a witness and date it.
- 6
Deliver to the company
The deed and original certificate reach the company within 60 days of the date of execution.
- 7
Board meeting
The board approves the transfer and authorises endorsement of the certificate.
- 8
Records and certificate
The company updates the register of members and issues the endorsed or new certificate within one month.
How much is stamp duty on share transfer in Delhi?
Stamp duty on a physical share transfer in Delhi is 0.015% of the consideration, the uniform rate under the Indian Stamp Act, 1899 as amended by the Finance Act, 2019, in force since 1 July 2020. The transferor is liable by law, though buyer and seller can agree who bears it.
Worked example: a founder sells 10,000 shares for ₹50,00,000. Stamp duty is 0.015% of ₹50,00,000, which is ₹750. Some older pages still quote 0.25% or face-value based duty; that rate no longer applies to share transfers. In Delhi, duty can be paid through SHCIL e-stamping or with share transfer stamps affixed and cancelled on the deed.
Government costs and time limits for a share transfer (as of November 2026)| Item | Cost or rule | Time limit |
|---|
| Stamp duty on SH-4 (physical shares) | 0.015% of consideration | Paid before or at signing |
| Off-market demat transfer | 0.015%, collected by the depository | When the transfer is processed |
| Delivery of deed to company | No fee | Within 60 days of execution |
| Notice of refusal by private company | No fee | Within 30 days of receiving the deed |
| Endorsed or new share certificate | Company cost | Within one month of receiving the deed |
| MCA filing for a plain transfer | None | Shown in the next MGT-7 annual return |
Sources: section 56 and 58 of the Companies Act as compiled at ca2013.com; stamp duty rate per TaxGuru on Delhi share transfer duty. Checked 10 November 2026.
What tax and FEMA points apply to a share transfer?
A share transfer can trigger capital gains tax for the seller and, where the price is below fair market value, tax for the buyer on the shortfall. Transfers between a resident and a non-resident must follow FEMA pricing rules and be reported. A valuation report done before signing settles most of these questions.
- Seller. Gains on unlisted shares are taxed as short-term or long-term capital gains depending on how long they were held. Our capital gains tax page covers rates and holding periods.
- Buyer. Buying unlisted shares well below fair value can be taxed in the buyer's hands, so gifts and cheap transfers between unrelated people need care.
- NRI or foreign buyer or seller. Pricing guidelines and reporting on form FC-TRS apply. See FEMA compliance.
- Gifts to relatives. These are generally treated differently from sales; we check the relationship and paperwork before you sign.
For a fair value report, see our valuation certificate service.
What mistakes hold up a share transfer?
Most share transfer problems come from an unstamped or late deed, a skipped pre-emption offer, missing board approval, or a price that does not match fair value. Each one can block registration or reopen the transfer during a later sale, fundraising or tax scrutiny.
- SH-4 signed but stamped afterwards, which goes against the rule that duty is paid before or at execution.
- Deed delivered to the company more than 60 days after signing. The board can still register it against an indemnity, but it adds paperwork.
- Register of members not updated, so the annual return shows the wrong shareholders.
- Shares already demat-mandatory but transferred physically.
- The exiting shareholder was also the GST authorised signatory or bank signatory and nobody changed it.
Who handles share transfers at CA in Delhi?
We handle share transfers for private companies across Delhi from our office at Netaji Subhash Place. You send us the articles, any shareholder agreement, the share certificates and the agreed terms. We send back a checked SH-4, the stamp duty working, board and member papers ready to sign, and updated registers and certificates.
- Moneymji lists valuation, due diligence and ROC compliance, which covers the price support and company records for most small transfers.
- Greenwolf Advisors works on cross-border structuring, relevant where a buyer or seller is abroad.
See all listed firms on our page of chartered accountant firms in Delhi. Founders in and around Pitampura can read about a CA in Pitampura, and for capital gains on the sale our tax consultant near me page explains what to bring. After reading the articles and the deal terms, we confirm a fixed quote for the transfer.
Frequently asked questions
Is stamp duty on share transfer 0.015% or 0.25%?
For transfers on or after 1 July 2020 it is 0.015% of the consideration. The 0.25% rate was the old rate before the Finance Act, 2019 amendments took effect. A ₹10 lakh transfer therefore carries ₹150 of stamp duty.
Does a share transfer need to be filed with the ROC?
A plain transfer of existing shares does not need a separate MCA form. The company records it in its register of members and the change shows in the next annual return on MGT-7. Related events, such as a director resigning or a change in significant beneficial ownership, have their own filings.
Can a private company refuse a share transfer?
Yes, if its articles allow. It must send notice of refusal with reasons to both parties within 30 days of receiving the deed. The buyer can appeal to the NCLT within 30 days of that notice, or within 60 days from delivery if no notice was sent.
Who pays stamp duty on a share transfer?
The law places liability on the transferor for physical off-market transfers. In practice buyer and seller often agree who bears the cost in their agreement, but the deed must be stamped before or at signing whoever pays.
Can shares be transferred to a family member as a gift?
Yes. The SH-4 shows nil or nominal consideration and the board approves the transfer like any other. Stamp duty treatment for a gift should be checked when the deed is prepared. Income tax treatment depends on whether the person counts as a relative, so we confirm that first.
How long does a share transfer take?
The legal clock is short: the deed must reach the company within 60 days of signing, and certificates follow within one month. Most of the real time goes into agreeing the price, the pre-emption offer and getting a valuation. A simple transfer between existing members can be done in days.
What is the difference between share transfer and transmission?
Transfer is voluntary, by sale or gift, and needs an SH-4 deed. Transmission happens by law when a shareholder dies or becomes insolvent; shares pass to the legal heir or nominee on proof such as a death certificate and succession documents, and no SH-4 deed is signed.
Can an NRI buy shares of a Delhi private company?
Usually yes, subject to FEMA sectoral rules and pricing guidelines, and the transfer must be reported on form FC-TRS. A fair value report is generally needed. We bring in the FEMA work before the deed is signed.
Do shares have to be in demat form before transfer?
For private companies other than small companies, Rule 9B requires dematerialisation, and transfers after the company's compliance date must be in demat form. Small companies can still transfer physical shares on SH-4. We check which applies from the latest financial statements.
Related services
Director appointment and resignationAppointment and resignation of directors: consent, DIN, board resolution and the DIR-12 filing with the ROC, handled in order.Valuation certificateWhich professional may sign a share valuation certificate under FEMA, the Companies Act and income tax rules, with contents and documents.Capital gains taxGain computation, Section 54, 54EC and 54F exemption planning and ITR filing for people selling property or shares.FEMA compliance (FDI and ODI)FDI and ODI reporting under FEMA: share issue and transfer forms, Form FC, APR by 31 December, FLA by 15 July and late fees.ROC annual filing and complianceAnnual ROC filings for Delhi companies and LLPs: AOC-4, MGT-7, Form 8, Form 11 and director KYC, tracked against each due date.CA in PitampuraPitampura households and shops: ITR, property sale tax and GST, two Red Line stops from our office.
Written and reviewed by the CA in Delhi team. Content is prepared with the chartered accountants of Khubchandani & Co., checked against the official portals cited on this page, and updated 2026-11-10. It is general information, not advice for your specific case.