SH-4 filing, stamp duty, register update

Category: ROC & Annual Compliance. From ₹2,999. Typical timeline: 5–7 days.

Overview

Transferring shares in a private limited company involves executing Form SH-4, paying applicable stamp duty on the transfer value, obtaining board approval where the articles require it, and updating the company's register of members — a process that, if skipped or done informally, can leave the transfer legally invalid and create ownership disputes later. This service handles the full paper trail so the new shareholder's name is properly reflected in statutory records.

Who needs it

• Founders bringing in a new co-founder or investor by transferring existing shares
• Shareholders exiting the company by selling their stake to another shareholder or third party
• Families transferring shares as part of succession or gifting
• Companies formalising share transfers that happened informally in the past

Eligibility

• Applicable to private and public companies where shares are being sold, gifted or transferred between existing or new shareholders
• Subject to any restrictions on transfer in the company's articles of association (such as right of first refusal)
• Requires both transferor and transferee to execute the transfer instrument

Documents required

• Share Transfer Form SH-4 duly executed by transferor and transferee
• Original share certificate(s)
• Board resolution approving the transfer (if required by articles)
• PAN of transferor and transferee
• Valuation or consideration proof for stamp duty computation

Process

1. Check articles and consent — Review the articles of association for any transfer restrictions, pre-emption rights or board approval requirements.
2. Execute Form SH-4 — Transferor and transferee sign the share transfer deed with the consideration and share details.
3. Pay stamp duty — Stamp duty is paid on the transfer instrument based on the consideration value and applicable state rates.
4. Board approval and register update — The board approves the transfer and the company updates its register of members and issues a fresh share certificate.

Government fees

• Stamp duty on share transfer: 0.015% of consideration value (or state-specific rate)

Professional fee

Our fee starts at ₹2,999, covering SH-4 drafting, stamp duty computation, board resolution and register updates.

Timeline

The process typically takes 5–7 working days, depending on how quickly board approval is obtained and stamp duty is paid.

Deliverables

• Executed and stamped Form SH-4
• Board resolution approving the transfer
• Updated register of members
• Fresh share certificate in the transferee's name

Frequently asked questions

Is stamp duty mandatory on private company share transfers?

Yes, stamp duty is payable on the share transfer instrument under the Indian Stamp Act, generally at 0.015% of the transfer value, though this can vary by state for physical instruments.

Do we need board approval for every transfer?

Most private company articles require board approval for share transfers, often including a right of first refusal for existing shareholders before an outside transfer is permitted.

What if the original share certificate is lost?

The company can issue a duplicate share certificate through a board-approved process before the transfer is completed.

Common mistakes

• Transferring shares informally without executing Form SH-4 or paying stamp duty
• Ignoring right of first refusal clauses in the articles or shareholders' agreement
• Not updating the register of members after the transfer
• Using an incorrect consideration value that understates stamp duty

Penalties for non-compliance

• An unstamped or improperly executed transfer instrument may not be legally valid or admissible as evidence
• Failure to update the register of members can create disputes over dividend and voting entitlement
• Non-compliance with articles-based restrictions can render the transfer void as between shareholders

Legal references

• Companies Act, 2013 — Section 56 governs transfer of shares and Form SH-4
• Indian Stamp Act, 1899 (and state stamp acts) — governs stamp duty on share transfer instruments
• Companies (Share Capital and Debentures) Rules, 2014 — procedural requirements