Question
Differentiate between share transfer and share transmission.
| No. | Points | Transfer of Share | Transmission of Share |
| 1. | Meaning | When a shareholder voluntarily passes ownership of share to another person, in accordance with the provisions of Companies Act and Articles of Association it is called Transfer of Share. | When a shareholder dies or he is declared by the court to be an insolvent or lunatic, then such compulsory transfer of share, under the law, is called Transmission of Share. |
| 2. | Circumstances | It is a voluntary transfer. Shareholder may transfer share/ shares at any time according to provisions of Companies Act. | In case of death, insolvency or person being declared lunatics death case of a, in single person company, transmission of share takes place. |
| 3. | Consent | In voluntary transfer, consent of both parties is essential. | In transmission of share consent of both parties is not necessary/ possible. |
| 4. | Consideration | Share transfer is arises due to a valid agreement of two parties so, consideration is essential. | In transmission of shares, shareholder loses ownership and ownership is shifted to legal representative. This is not selling so there is no consideration. |
| 5. | Stamp duty | In a share transfer, stamp duty is necessary according to prevailing law. If the stamp duty is not affixed as per law, share transfer is not valid in physical shares. | In a transmission of share there is no consideration. So stamp duty is not essential. |
| 6. | Membership | Membership is obtained by the transferee after the approval of the Board of Directors, and his name is entered into the Register of member. | Legal representative is entitled, to the rights of a member and can claim dividend. |
| 7. | Procedure | A procedure of the Board of Directors is required following the provisions of Articles of Association. | Legal representative sends evidences supporting his rights obtained through court to the company for getting his name registered as member. |
| 8. | Refusal | Board of Directors may refuse to transfer of shares, if such refusal is in the interest of the company. | Generally, the directors of the company cannot refuse transmission of shares. |
| 9. | Responsibility | The original shareholder does not have any responsibility after transfer of shares is complete. | In transmission of shares, there is no personal responsibility of the representative. However, he has to accept responsibility arising due to shares. |
| 10. | Right to go to a Tribunal | If a company refuses to transfer without valid reason, the shareholder has the right to go to a Tribunal. | The company can not refuse transmission ans so the question of going to tribunal does not arise. |
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