Share transfer is an important procedure. Shareholders use their right to transfer shares with the consent of the company. Share is a part of capital of a company. It is a financial interest of a shareholder. It is a movable asset for shareholders. Shareholder has a right to sell, right to gift, and right to lease his shares. For this Lord Blackburn has said "Main objective to start Joint Stock Company is to provide easy transfer of shares to their members." Purchase and sales of share is conducted in the share market. This is a source of capital, so it is known as the barometer of the development of a country.
(1) Share transfer generates income for the Government. Share transfers increase leads to increase in the Government's income because the Government has imposed tax on it.
(2) Shareholders get cash on sale of shares.
(3) Purchaser of shares gets rights of ownership.
(4) Shareholder is able to get benefit of market variation.
(5) Invested funds of inefficient units flow to efficient units.
(6) Share market and capital market grow as a result of share transfer.
(7) Free share transfer leads to an increased span and scope of the development of a company.
Provisions for transfer is specified in the Articles of Association. Sometimes, there may be restriction (In private company). But the right of a shareholder cannot be taken away by imposing prohibition on it. A member can, when he wishes, sell or gift his share to others.