# Important Notes on Transfer of Shares

## 1. Lost or Delayed Transfer Deed

If the instrument of transfer (transfer deed) is lost or not delivered within the prescribed time:

The company may still register the transfer.
However, before doing so, the Board of Directors may require the transferor (TOR) and the transferee (TEE) to give an indemnity to the company, in such form as the Board thinks fit.

## 2. Transfer with Intent to Defraud

If a transfer is made with an intent to defraud, the persons involved are liable for fraud under Section 447.

### Forgery in Transfer

In cases of forged transfers, the original/true owner's title is NOT lost.
The forged transferee acquires no title, and even subsequent purchasers in good faith get no title against the true owner.
The company can be made to restore the true owner's name in the Register of Members.

## 3. Exemptions — Government Companies

Certain provisions of share transfer are relaxed for Government Companies:

Case	Exemption
Transfer of shares held by nominees of CG	Mere intimation is enough (no full transfer deed required)
Transfer of bonds issued by Government Companies	Same simplified procedure applies

Worked example

### Example 1

Example 1 — Lost transfer deed: Mr. A executes a transfer deed in favour of Mr. B, but it gets lost in transit. The company may still register the transfer, but the Board can ask both A and B to execute an indemnity bond protecting the company against any future claim.

### Example 2

Example 2 — Forgery: Mr. C forges Mr. D's signature and transfers D's shares to E. The company registers the transfer. When D discovers it, he can demand restoration of his name. E (and any subsequent transferees from E) get no title because forgery is a nullity.

### Example 3

Example 3 — Govt nominee transfer: Shares of XYZ Ltd are held by a nominee of the Central Government. When transferred to another CG nominee, only intimation to the company is needed — full transfer formalities are relaxed.

⚠️ Common exam mistakes

Believing the company must refuse registration if the transfer deed is lost — it can still register with indemnity.
Thinking forgery passes title to a bona fide purchaser — it does not. Forgery is void ab initio.
Applying full transfer-deed procedure to government nominee share transfers when mere intimation suffices.
Missing the link between fraudulent transfer and Section 447 fraud liability.

Reference: Sections 56, 447 — Companies Act, 2013

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Transfer Procedure — Lost Deeds, Forgery, Government Company Exemption

Worked example

⚠️ Common exam mistakes