Difference between transfer of shares and transmission of shares

Difference between transfer of shares and transmission of shares

Meaning of Transfer of Shares

  • Transfer of shares refers to transferring of title to shares, voluntarily, by one party to another.
  • It is voluntary in nature.
  • It is affected voluntarily or by the act of the parties.
  • Consideration must be paid when shares are being transferred.
  • Liabilities of the parties end on completion of transfer.
  • Transfer of Shares is initiated by Transferor or Transferee.
  • Stamp Duty is payable on market value of shares.
  • Formalities are to be observed as mentioned in section 56
  • Instrument of Title has to be executed by both Transferor and Transferee
  • Transfer of shares is not permissible

Meaning of Transmission of shares

  • Transmission of shares refers to the transfer of title of shares by the operation of law.
  • It is compulsory in nature as it is caused by Operation of Law.
  • It is affected by Death, Insolvency, Inheritance or lunacy of the parties.
  • No consideration is paid at the time of Transmission of Shares.
  • Liabilities of the parties continue to exist.
  • It is initiated by legal heirs or receivers.
  • There is no need to pay Stamp Duty.
  • No formality is required at the time of Transmission of Shares.
  • Instrument of title is also not required.
  • Transmission of Shares is permissible.

Difference between transfer of shares and transmission of shares

Basis Transfer of Shares Transmission of Shares
Meaning Transfer of shares refers to transferring of title to shares, voluntarily, by one party to another.
Transmission of shares refers to the transfer of title of shares by the operation of law.
Nature Voluntary Compulsory
Affected by Voluntary/By act of Parties Death, Insolvency, Inheritance or lunacy of the parties.
Consideration consideration must be paid. No consideration is paid
Liability Liabilities cease on the completion of transfer Liability continues to exist.
Initiated by Transferor and transferee Legal heir or receiver
Execution of valid transfer deed Yes No
Stamp duty It’s payable on the market value of shares There’s no need to pay.
Lock in Period Transfer of shares is not permissible. Transfer of Shares is permissible.
Formalities Formalities are to be observed as mentioned in section 56 No such formalities are required.
Instrument of Title It has to be executed by both Transferor and Transferee
Not required.

References
https://www.shaalaa.com/question-bank-solutions/distinguish-between-transferof-shares-transmi
https://www.owlgen.in/what-do-you-mean-by-transmission-of-shares-distinguish-between-transfer-and-transmission-of-shares

Author: Shreya Rathor,
Bharati Vidyapeeth Deemed University, Pune, Final Year

Leave a Comment