Commercial Correspondence and Secretarial Practice · Ch 2 — Transfer and Transmission of Shares
Distinction Between Transfer and Transmission; Nomination of Shares
Distinction Between Transfer and Transmission; Nomination of Shares
Transfer and transmission both end with the same visible result — a name change in the company's register of members — but they differ in almost every other respect, from how they begin to how the company must treat them. The table below sets out the principal points of distinction between transfer and transmission of shares:
| Basis | Transfer of Shares | Transmission of Shares |
|---|---|---|
| Nature of the act | A voluntary act of the shareholder | Happens by operation of law, on a specified event |
| How it is initiated | Initiated by the shareholder himself (the transferor), by agreement with a transferee | Initiated by the legal representative, Official Assignee, guardian or liquidator, on death, insolvency, insanity or winding up |
| Instrument required | A duly executed and stamped instrument of transfer (Form SH-4) is compulsory | No instrument of transfer is required; the applicant instead furnishes proof of the triggering event |
| Consideration | Usually made for consideration — a price is paid for the shares | No consideration passes; it is a recognition of an existing entitlement |
| Stamp duty | Payable, since it is a transfer for value | Not payable, since there is no sale or exchange |
| Time limit for lodging | Instrument must reach the company within 60 days of execution | No fixed lodging deadline in the Act itself, though the applicant should apply as soon as the necessary documents are obtained |
| Company's power to refuse | The company may validly refuse under Section 58, subject to the parties' right of appeal | The company may equally refuse a transmission it is not satisfied about, subject to the same right of appeal under Section 58 |
| Liability of parties before registration | The transferor remains liable to the company until the transfer is actually registered | The deceased or insolvent member's estate remains represented by the legal representative or Official Assignee until registration |
Nomination of shares. The Companies Act, 2013 also gives shareholders a way to plan for transmission in advance, through nomination, under Section 72. Every holder of securities of a company — whether the holding is by a single individual or jointly by more than one person — may, at any time, nominate, in the prescribed manner (Form SH-13), a person to whom his securities shall vest in the event of his death. Where the securities are held jointly, the joint holders may together nominate a person who becomes entitled only once all the joint holders have died. …
The set of differences separating a voluntary, consideration-based transfer from a transmission that arises automatically by operation of law, on death, insolve …
The facility allowing a security holder to nominate, in Form SH-13, a person to whom his securities shall vest on his death, to the excl …
The prescribed forms for making a nomination (SH-13) and for varying or cancelling an existing nomination (SH-14) under the Companies …
The nominee's entitlement, on the holder's death, to all rights in the nominated securities, generally without needing a succession certificate, probate o …