# Transfer of Partly Paid-up Shares & Transmission of Shares

## 1. Transfer of Partly Paid-up Shares

When the application to register a transfer of partly paid-up shares is made by the transferor (TOR) alone:

The company shall give notice in Form SH-5 to the transferee (TEE).
The TEE shall give 'No Objection' to the transfer within 2 weeks of receipt of notice.
Only thereafter can the company register the transfer.

Reason: Since the shares are partly paid-up, the transferee will inherit the liability to pay the unpaid amount. So his consent is essential.

## 2. Transmission of Shares

Transmission of shares takes place by operation of law — not by a voluntary act of the holder. The company shall register the transmission on intimation by the person to whom the shares are transmitted.

### Situations where transmission arises:

Situation	Person entitled
Death of a member	Legal Representative (LR)
Insolvency of a member	Resolution Professional (RP)
Lunacy of a member	Administrator appointed by Court

## 3. Transfer of Shares of a Deceased Person

A transfer made by the Legal Representative (LR) of a deceased person shall be valid even if the LR is NOT a registered holder as on the date of execution of the transfer deed.

> Illustration: Dharmendra (deceased member) → Sunny (LR of Dharmendra) executes a transfer to Akshay. The transfer is valid even though Sunny was not registered as a member. This is a combined transmission + transfer transaction.

Worked example

### Example 1

Example 1 — Partly paid-up shares: Mr. A holds 1,000 partly paid-up shares (₹10 face value, ₹6 paid). He executes a transfer deed in favour of Mr. B and lodges it alone with the company. The company must issue notice in Form SH-5 to Mr. B. If Mr. B does not raise any objection within 2 weeks of receipt, the company can register the transfer.

### Example 2

Example 2 — Transmission on death: Mr. X, a member, dies. His son Y (legal heir as per succession certificate) approaches the company. The company shall register the transmission in favour of Y on receipt of intimation along with required documents. No transfer deed is required.

### Example 3

Example 3 — Transfer by LR: Dharmendra owned shares. He dies. His LR Sunny executes a transfer deed in favour of Akshay. Sunny himself was never entered in the Register of Members. Still, the transfer is valid — it operates as a transmission to Sunny followed by transfer to Akshay.

⚠️ Common exam mistakes

Confusing 'transfer' (voluntary act between parties) with 'transmission' (by operation of law).
Forgetting that for partly paid-up share transfers lodged by transferor alone, transferee's NOC is needed in Form SH-5.
Assuming a Legal Representative must first be registered as a member before he can transfer shares of a deceased — this is NOT required.
Confusing the form (SH-5 is for partly paid share transfer notice to transferee).

Reference:

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Transfer of Partly Paid-up Shares and Transmission

Worked example

⚠️ Common exam mistakes