Refusal of Registration and Appeal Against Refusal [Section 58]

# Refusal of Registration and Appeal

## Foundational Concept — Transferability

• Shares are movable property transferable in the manner laid down by the Articles.
• The right to transfer is inherent in ownership — Articles cannot make shares wholly non-transferable.
• Public company shares: freely transferable.
• Private company shares: Article must restrict transferability per Section 2(68)(i). Typical restriction = right of pre-emption (existing members get first refusal).

## Section 58 Framework

### Private Company Refusal

A private company may refuse to register a transfer, but must:

• Send notice of refusal to the transferor and transferee within 30 days of receipt of instrument of transfer,
• State reasons for refusal.

Aggrieved transferee may appeal to the Tribunal:

• Within 30 days of receipt of notice of refusal, OR
• Within 60 days of delivery of instrument (where no notice was sent).

### Public Company Refusal

A public company cannot refuse without sufficient cause. If it does refuse, the transferee may appeal to the Tribunal:

• Within 60 days of receipt of notice of refusal, OR
• Within 90 days of delivery of instrument (where no notice was sent).

### Memory Aid — Appeal Windows

## Tribunal's Powers — Section 58(5)

After hearing parties, the Tribunal may:

• Dismiss the appeal, OR
• Order that the transfer/transmission be registered within 10 days of receipt of the order, OR
• Direct rectification of the register and payment of damages to the aggrieved party.

## Contravention of Tribunal's Order — Section 58(6)

If any person contravenes the Tribunal's order:

## Visual Summary

```

REFUSAL TO TRANSFER

/ \

Private Co Public Co

Send refusal Cannot refuse without

notice + reasons sufficient cause

Appeal: 30/60 days Appeal: 60/90 days

\ /

\ /

Tribunal: dismiss OR order

1. Register within 10 days

2. Rectify register (with damages)

|

Contravention

= 1-3 yrs jail + ₹1-5L fine

```