Q.Justify the following statement.
The Board of Directors can refuse transfer of shares.

The statement is justified. While shares of a public company are freely transferable in principle, the Board of Directors can lawfully refuse to register a transfer on valid grounds such as a defective transfer deed, missing documents, unpaid calls, or powers given by the articles — but the refusal must be made in good faith and communicated within the prescribed time.

Transfer of shares is normally a right of the shareholder, but registration of that transfer in the company's records requires the Board's approval. The Board is not bound to register every transfer blindly; it may refuse a transfer on justified grounds:

• Defective instrument of transfer: If the transfer deed (Form SH-4) is incomplete, unsigned, improperly filled or not adequately stamped, the Board can refuse it.
• Documents not attached: If the share certificate or allotment letter and other required documents do not accompany the transfer deed, the transfer can be refused.
• Unpaid calls (lien of the company): If any call money or other amount is due and unpaid on the shares, the company has a lien, and the Board may refuse the transfer until the dues are cleared.
• Power under the Articles of Association: The articles, especially of a private company, may authorise the Board to refuse transfers; the Board can then act within that power.
• Transfer against company's interest or law: If the transfer is in violation of any legal provision or is not in the interest of the company, it may be refused. …