Q.Explain the importance of share transfer.

Transfer of shares matters because it gives investors liquidity and an easy exit, keeps company capital and existence undisturbed, encourages fresh investment, and supports an active stock market.

The importance of share transfer can be seen from several angles:

1. Liquidity to shareholders — a member who needs money can sell his shares in the market and convert his investment into cash quickly.
2. Easy exit without harming the company — when a shareholder leaves by selling, another takes his place; the company's paid-up capital and funds are not withdrawn or disturbed.
3. Stability and continuity of the company — because capital stays intact despite changes in ownership, the company enjoys perpetual succession and continuous existence.
4. Encouragement to investment — investors put money in shares confidently knowing they can sell whenever they wish; free transferability thus attracts savings into companies.
5. Active capital market — constant buying and selling creates a lively stock exchange, aids fair price discovery of shares, and helps companies raise further capital. …