# Forged Transfer of Shares
## Core Principle
A forged transfer is a 'nullity' — it is void ab initio and not legally binding on anyone. Forgery taints the entire transaction and cannot pass title.
## What is a Forged Transfer?
A forged transfer occurs when a company effects a transfer of shares based on an instrument of transfer containing forged signatures of the transferor (the real owner did not sign).
## Can the Transferee Acquire Ownership?
NO. Even if the company registers the transfer and issues a fresh certificate, the transferee acquires no title because nothing valid was transferred. The real owner continues as shareholder and can compel the company to:
- Delete the transferee's name from the Register of Members; and
- Restore the original owner's name.
## The Three-Party Tangle — When a Further Transfer Occurs
If the fraudulent transferee then sells the shares to an innocent buyer (B) who acts in good faith, and the company registers B and endorses a fresh certificate in B's favour, the position becomes complex:
| Party | Right | Reason |
|---|---|---|
| Original Owner | Must be restored to Register | Forged transfer is void ab initio |
| Innocent Buyer (B) | Cannot be denied ownership (because of company's endorsement creating estoppel) | Company is estopped by its own certificate |
| First (fraudulent) Transferee | Liable to indemnify the company | He used the forged instrument |
## The Company's Practical Remedy
The company:
1. Restores the original owner's name (mandatory — forged transfer is void).
2. Compensates the innocent buyer (B) who relied on the company's endorsement in good faith.
3. Recovers from the first transferee via an indemnity — since that person used the forged instrument.
## Key Doctrine
Nemo dat quod non habet — "no one can give what they do not have." The fraudulent transferee never owned the shares, so could not pass title even to a bona fide purchaser. But the company's certificate creates estoppel in favour of the innocent buyer — which is why the company ends up paying compensation.