Hi, My Company is having 2 directors. 1 with 99% and 2nd with 1%/. 2nd director is resigning from directorship and wants to give up their part of 1% shares as well. We have replacement director already. How to transfer a directorship from one director from another director and same time transferring a share of 2nd director to new director?
To transfer the directorship and shares from the resigning director to the new director in India, you need to follow the process outlined below:
- The second director who wishes to resign should submit a formal resignation letter to the company’s board of directors. The letter should state their intention to resign from the directorship and surrender their shares.
- The resignation letter should include the effective date of resignation, and it is recommended to keep a copy of the letter for record-keeping purposes.
Board Meeting and Resolution:
- The board of directors should convene a meeting to accept the resignation and appoint the new director.
- During the meeting, a board resolution should be passed to officially accept the resignation of the second director and appoint the new director.
- The board resolution should also include the transfer of the resigning director’s shares to the new director.
- Make sure to document the board resolution in the minutes of the meeting.
- Prepare a share transfer agreement between the resigning director and the new director, detailing the transfer of shares from the resigning director to the new director.
- The share transfer agreement should include the number of shares being transferred and any relevant terms and conditions.
- Both parties should sign the share transfer agreement.
- Update the company’s share register to reflect the transfer of shares from the resigning director to the new director.
Filings and Documentation:
- File the necessary forms and documents with the Ministry of Corporate Affairs (MCA) within the prescribed timeframe.
- Update the company’s statutory registers, including the register of directors and register of shareholders, to reflect the changes.
- Issue new share certificates to the new director, reflecting their ownership of the transferred shares.
It is crucial to consult with a qualified legal professional or a company secretary who is familiar with Indian company law to ensure compliance with all legal requirements and proper execution of the transfer process. They will guide you through the necessary steps and help you complete the required paperwork accurately.
Describe more information about share transfer agreement in india
In India, a share transfer agreement is a legal document used to transfer shares from one party to another. It outlines the terms and conditions of the share transfer and serves as evidence of the transaction. Here is some additional information about share transfer agreements in India:
Content of the Agreement:
- Parties Involved: The agreement should clearly identify the transferor (the resigning director) and the transferee (the new director) by their names and addresses.
- Description of Shares: The agreement should specify the details of the shares being transferred, such as the class of shares, number of shares, and face value.
- Consideration: The agreement should state the consideration for the transfer, which can be monetary or non-monetary. In some cases, the shares may be transferred as a gift or for nominal consideration.
- Terms and Conditions: The agreement may include any specific terms and conditions agreed upon by the transferor and transferee, such as restrictions on further transfer of shares, lock-in periods, or any other relevant provisions.
Execution and Signatures:
The share transfer agreement should be executed on non-judicial stamp paper of appropriate value, as per the stamp duty laws applicable in the relevant state in India.
Both the transferor and transferee should sign the agreement in the presence of at least two witnesses.
It is advisable to notarize the share transfer agreement to add an extra layer of authenticity.
Stamp Duty and Registration:
- Stamp duty is applicable on share transfer agreements in India. The amount of stamp duty varies depending on the state where the agreement is executed and the value of the shares being transferred.
- The share transfer agreement may need to be registered with the relevant Registrar of Companies (RoC) within 30 days from the date of execution, as per the provisions of the Companies Act, 2013. The specific registration requirements may vary based on the jurisdiction and the company’s type.
Compliance and Documentation:
- Maintain a copy of the executed share transfer agreement and other relevant documents as part of the company’s records.
- Update the share register and issue new share certificates to reflect the transfer of shares.