Share Allotment
Allotment of shares is the process by which a company issues new shares to investors, founders, or employees. This typically happens during incorporation, fund raising, or issuing ESOPs. The company must follow procedures under the Companies Act, 2013 to ensure legal compliance.
Key Steps in Share Allotment:
⇒ Board Meeting – Approve the allotment of shares
⇒ Allotment Letter – Sent to the allottee (person receiving shares)
⇒ Filing Form PAS-3 – File with ROC within 30 days of allotment
⇒ Issue Share Certificates – Within 2 months from the allotment date
Share Transfer
Transfer of shares refers to the voluntary shifting of share ownership from one person (transferor) to another (transferee). This is common when a shareholder sells or gifts their shares. It is more applicable to private limited companies, which may have restrictions in their Articles of Association.
Key Steps in Share Transfer:
- Execute Share Transfer Deed (Form SH-4)
- Pay Stamp Duty (usually 0.25% of the share value)
- Board Approval – Company must approve the transfer
- Update Register of Members and issue updated share certificate
Compliance is Important Because:
- It ensures legal ownership records are updated
- Avoids disputes and ensures eligibility for dividends and voting rights
- ROC filings maintain transparency with government authorities