Corporate Law

49

20 – TRANSFER & TRANSMISSION

Transfer means transferring shares to someone on a voluntary basis however transmissions occurs by
operation of law e.g. on death the shares are transferred to the legal representatives or in case of
insolvency the shares are transferred to official assignee etc.

Transfer of shares and other securities (Sec 74)

1. Application for transfer may be made either by transferor or transferee.

2. A Company shall not register a transfer unless proper instrument of transfer provided to
the company.

3. It is necessary that an instrument duly stamped and executed by transferor and transferee has
been delivered to company

4. Company shall within 15 days of application, complete the process of transfer.

5. The company ensures that: -

 Delivery of the certificates to transferee at his registered address;

 Enter the name of transferee in the register of members.

6. In case of conversion of physical shares into book-entry form, a company shall, within 10 days of
application, register such transfer in the name of the CDC.

7. Where transfer deed is lost, destroyed or mutilated before lodgment,

 An application shall be made by transferee bearing stamp as per the instrument of transfer

 Transferee shall prove to directors that transfer deed is lost / destroyed / mutilated.

8. Company may demand such indemnity as it may think fit before registering the transfer.

9. Register of transfers of shares and other securities shall be maintained at registered office

10. The register shall be open to inspection by the members.

11. Any violation of this section shall be an offence liable to a penalty of level 2

Transfer of shares in case of a private company (Sec 76)

1. A member of a private company, desirous of selling any shares, shall intimate BOD his
intention through a notice.

2. BOD shall within 10 days offer those shares for sale to the members in proportion to their
existing shareholding.

3. The letter of offer for sale shall be dispatched to the members through registered post or
courier or through electronic mode, specifying:
 Number of shares to which the member is entitled

 Price per share

JAMSHAID IFTIKHAR
M.Phil Commerce & Finance
Corporate Law
50

 Time limit, within which the offer, if not accepted,

4. If whole or any part of shares offered is not taken, BOD may offer such shares to other members
in proportion to their shareholding.

5. If all members decline to accept the offer or if any shares are left over, shares may be sold to
any other person as determined by the original member.

6. The mechanism to determine the price of shares shall be such, as may be specified.

REFUSAL OF TRANSFER

a. Directors not to refuse transfer of shares (sec 75)

1. Directors shall not refuse unless transfer deed is defective or invalid

2. Within 15 days of deposit of instrument of transfer notify defect/invalidity to transferee.

3. Applicant shall be entitled to relodge transfer deed after removal of defect/invalidity.

4. AOA may impose any limitations & restrictions on this process for Private company.

b. Notice of refusal to transfer (Sec 77)

1. Company shall, within 15 days send notice to transferee for refusal indicating reasons for such
refusal.

2. Failure by the company to give notice of refusal after the expiry of said period shall be
deemed refusal of transfer.

3. Any violation of this section shall be an offence liable to a penalty of level 2

Appeal against refusal for registration of transfer (Sec 80)

1. Transferor/Transferee/Successor in interest may appeal to SECP against any refusal to
register transfer/transmission

2. Appeal to SECP may be preferred within 60 days of refusal

3. SECP may direct Company to register the transfer or transmission or that it need not be
registered.

4. Before making order, SECP may provide opportunity of hearing to the parties concerned.

5. SECP may give such incidental & consequential directions as to payment of costs or
otherwise as it deems fit.

Transfer of shares in case of death of a member

1. Shares of a deceased member shall be transferred on application with succession
certificate or by lawful award, in favour of the successors to the extent of their interests.

2. Their names shall be entered in the register of members.

JAMSHAID IFTIKHAR
M.Phil Commerce & Finance
Corporate Law
51

Transfer to nominee of a deceased member (Sec 79)

1. Any member may deposit with company a nomination to protect the interest of his legal
heirs in the event of his death.

2. On death of member, nominee shall be deemed as a member till the shares are transferred
to legal heirs.

3. If the deceased was a director of company nominee shall also act as

director of company to protect the interest of the 1egal heirs.

4. Transfer of shares to the legal heirs shall according to Islamic law of inheritance; and as per their
respective law, in case of non-Muslim members.

5. Nominee can only be member's spouse, father, mother, brother, sister, son or daughter.

6. Such nomination would not prejudice his right to transfer, dispose of or otherwise deal in
shares owned by him during his lifetime

JAMSHAID IFTIKHAR
M.Phil Commerce & Finance