# Transfer and Transmission of Securities (Sections 56 & 58)

## Transfer vs. Transmission — The Core Distinction

Concept	Transfer	Transmission
Trigger	Voluntary act between parties	Operation of law (death, insolvency, marriage, etc.)
Instrument Required?	Yes (Form SH-4, duly stamped)	No instrument; only intimation + supporting documents
Parties	Transferor + Transferee	Legal heir/representative
Stamp Duty	Applicable	Not applicable

## Transfer of Securities — Conditions for Registration

The company shall register a transfer only if all the following are satisfied:

1. Instrument of transfer (Form SH-4) is duly stamped and dated.

2. The instrument specifies name, address, and occupation of the transferee.

3. The instrument is executed by BOTH transferor and transferee.

4. The instrument is delivered to the company (along with certificate of security or letter of allotment) within 60 days of execution.

5. The instrument is in the prescribed form (SH-4).

> If instrument is lost or not delivered within 60 days, the company may still register the transfer on such terms of indemnity as the Board thinks fit.

> Important: This procedure applies only to physical securities — not to securities held in demat (depository) form.

## Partly Paid Shares — Special Procedure

If application for transfer of partly paid shares is made by the transferor alone, the company shall NOT register transfer unless:

The company gives notice to the transferee in Form SH-5, AND
The transferee does not raise objections within 2 weeks of receipt of notice.

## Transmission of Securities

### Definition

Transmission means devolution of title of securities by operation of law (other than by transfer). Examples: death, marriage, insolvency, lunacy.

### Process

The company registers transmission on intimation from the person to whom securities are transmitted.
No instrument of transfer is required.
Supporting documents (e.g., death certificate copy) must be forwarded.

### Legal Representative's Power

The legal representative of a deceased person can transfer securities to another person, even without being registered as holder at the time of transfer — i.e., as if he were the holder.

## Time Limits for Delivery of Certificates of Securities

Deliver To	Time Period
Subscribers to MOA	Within 2 months of incorporation
Allottees of shares	Within 2 months of allotment
Allottees of debentures	Within 6 months of allotment
Transferee (on transfer)	Within 1 month of receipt of instrument of transfer
Transferee (on transmission)	Within 1 month of intimation of transmission

## Punishment for Default (Section 56)

Company AND every officer in default: Fine of ₹50,000.

## Memory Hook — Time Limits

"Subscribe 2, Share 2, Debenture 6, Transfer/Transmit 1"

Subscribers → 2 months
Shares allotted → 2 months
Debentures → 6 months
Transfer/Transmission → 1 month

Worked example

### Example 1

Example 1: A transferor and transferee execute Form SH-4 on 1 March 2025. The transferor delivers it to the company on 5 May 2025 (65 days later) along with share certificate.

Analysis: Beyond the 60-day window. The company is not bound to register, but the Board MAY register on such terms of indemnity as it thinks fit.

### Example 2

Example 2: Mr. X holds 1,000 partly paid shares. He alone signs Form SH-4 transferring them to Mr. Y. The company sends notice in Form SH-5 to Mr. Y on 10 April. Mr. Y does not respond.

Analysis: If Mr. Y does not object within 2 weeks (by 24 April), the company may register the transfer.

### Example 3

Example 3: Mrs. A, holder of 500 shares, dies on 10 January 2025. Her son submits a death certificate and succession certificate to the company on 1 February 2025.

Analysis: This is transmission (by operation of law). No SH-4 needed. The company must register the transmission on intimation and deliver the new certificate within 1 month, i.e., by 1 March 2025.

⚠️ Common exam mistakes

Applying Section 56 transfer procedure to demat (depository) shares — the section applies ONLY to physical securities.
Believing the 60-day delivery window is mandatory — if missed, the Board MAY still register on terms of indemnity.
Confusing the time limits — shares (2 months) vs. debentures (6 months) for allotment; transfer/transmission is 1 month.
Treating transmission like transfer and demanding stamped Form SH-4 — transmission needs only intimation and supporting documents.
Forgetting that for partly paid shares transferred by transferor alone, Form SH-5 notice is needed AND a 2-week window must lapse without objection.
Believing the legal representative cannot transfer without first being entered as a registered holder — he can transfer 'as if he is the holder'.

Bare-Act text Sections 56 and 58 · Companies Act, 2013 · click to expand

Section 56 of the Companies Act, 2013 deals with transfer and transmission of securities. A company shall not register a transfer of securities unless a proper instrument of transfer duly stamped, dated and executed by or on behalf of the transferor and the transferee, specifying the name, address and occupation of the transferee, has been delivered to the company within 60 days from the date of execution along with the certificate relating to the securities or letter of allotment of securities. The provisions on transmission allow the company to register, on intimation, the devolution of title by operation of law.

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Transfer and Transmission of Securities (Sections 56 and 58)

Worked example

⚠️ Common exam mistakes