Transfer of shares means an act of transfer of title of share certificate from one person (transferor) to another (transferee). Transfer of shares is needed when one buys shares from secondary markets or holds shares in physical form. As per section 108 of the Companies Act 1956, submission of valid transfer deed is compulsory for transfer.
An investor may face numerous problems while transferring shares to his name. Share Samadhan provides services to investors who encounter following problems:
Mismatch of signature: Sometimes companies deny transfer of shares due to mismatch of the signature of the transferor in the transfer deed and specimen signature available in company records.
Non-submission of transfer deed:The buyer has paid the consideration but has not submitted the transfer deed with the company. Consequently, as per the company records, the shares still remain in the seller’s name.
Loss of share certificates: A shareholder may loss share certificates, hence, denying him from valuable possession of his investments. The shareholder has to get duplicate share certificates in his or her name from the company.
Mutilated share certificates: Due to wear and tear of share certificates sometimes they get mutilated causing problem in share transfer.
Transmission of shares at times is hugely cumbersome and runs into many legal complications. We help our clients by providing services relating to entire range of transmission of shares. A few common issues that we come across frequently are as follows:
Mixing up transfer of shares with transmission of shares: One of the widely- experienced problems is not to find out the difference between transfer and transmission of shares. The Companies Act clearly distinguishes transmission of shares from transfer of shares. While transfer of shares relates to a voluntary act of the shareholder, transmission is brought about by operation of law. Unlike transfer of shares, in case of transmission, shares are transferred without any consideration. The transmission takes place on the basis of will or an agreement.
Holding in various companies: In case the deceased shareholder had holdings in different companies, the relevant documents must be sent to each of the companies along with the share certificates in order to effect transmission of shares. This needs constant follow-up with each of the companies.
Jointly-held securities: Problems also arise if deceased was one of the joint holders. In that case the surviving holders must have a depository account and apply for transmission of shares following the due procedures.
Share transmission is the devolution of title of shares of a shareholder due to death, inheritance, bankruptcy, insolvency, lunacy, marriage or by any other lawful means other than transfer. On registration of the transmission of shares, the person becomes the shareholder of the company and is entitled to all rights as a shareholder.
Dematerialisation (popularly ‘demat’) is the process of converting physical shares into electronic format. An investor who wants to dematerialise his shares needs to open a demat account with a Depository Participant (DP). Investor surrenders his physical shares and in turn gets electronic shares directly in his demat account. Under the current provision, dematerialisation of promoter shareholding is mandatory while non-promoter investors have an option to hold securities either in physical or demat form.
. A retail investor can hold shares in physical form, but cannot trade. For trading (buy or sell) of shares, an investor has to have a demat account.
. Demat is safe and convenient as it reduces risk of holding shares in physical form, reduces paperwork, ensures immediate transfer and eliminates bad deliveries.
. It eliminates transit losses relating to benefits such as dividends, bonuses, stock split, rights as these are automatically transferred into demat.
. Any update with depository gets automatically registered with all companies in which investor holds securities eliminating the need to correspond with each of them separately.
Here are a few problems that a shareholder often faces. We help such problems and help investors to convert physical shares to demat.:
Dormant demat account: Demat account of an investor may become dormant due to inactivity for a long time. This frequently happens with passive investors who adopt a ‘buy and forget’ approach. This may also happen with an investor who opens new demat account without transferring shares to it from old account. In such cases, the investor faces problems in trading, transfer and transmission of shares.
Lack of updated information: An investor has changed address, but the details are correspondingly not updated with the depository participant or the company, resulting in a mismatch with the shareholder’s database. In this case, the investor may lose benefits such as dividends, bonus, split shares, rights issues etc.
Loss of demat details: For some reasons, a shareholder may loss his demat details, resulting in complete lack of communication with the company and depository participant.
Unclaimed dividend is the declared dividend by a company which is not encashed or claimed by the shareholders. The Companies Act of 1956 mandates that dividends not paid or claimed in 30 days are transferred to a separate bank account. An investor can claim his dividends from this account anytime in the next 7 years. After that, it goes to the Investor Education and Protection Fund (IEPF) which is managed by the Ministry of Corporate Affairs.
Although the government has ensured unclaimed dividends, deposits, debentures, bonus, split shares etc to be in safe hands so that the investors can claim it even after a certain period, the number of the affected investors are no less. We provide a whole range of servcies to investors to recover their unclaimed dividends, bonuses, split shares etc. An investor may face such problems because of following reasons:
Outdated records: Unclaimed Dividend largely exists due to incorrect or outdated details of a shareholder in company’s records. Non-intimation of change of address or other details to the respective company results in mismatch of investor’s database with various authorities.
Non-execution of transfer: Shares purchased by an investor remain in the name of the seller due to non-execution of transfer in the name of the buyer. This happens when an investor holds physical shares.
Non-execution of transmission:It happens when a legal heir or successor fails to ‘transmit’ shares in his name after the death of an investor in whose name shares or debentrues are actually held in company’s records, leading to unclaimed corporate benefits including dividends etc.
Share Samdhan provides service to investors facing following problems:
Inadequate records: Change of address, bank accounts or any other details are not in the company’s record, leading to lack of exchange of communication between company and investor.
Long maturity period: As these are long-term investments ranging from 10 to 20 years, investors tend to lose track of it.
Loss of certificates: Becuase of long holding period, it’s quite a common issue that investors loss certificates as many still hold it in physical form.
A convertible debenture is a financial instrument which changes its nature after completion of a specific period of time. It is a type of loan issued by a company that can be converted into stock by the holder and, under certain circumstances, the issuer of the bond.
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. IBC empowers all classes of creditors (secured and unsecured lenders, employees, trade creditors, regulatory authorities).
. Provides for immediate suspension of the BOD and promoters’ powers.
. Provides for an insolvency professional to take control.
. Offers a finite time for resolution process.
. The process may be initiated by either the debtor or the creditors.
. National Company Law Tribunal (NCLT) would deal with matters relating to corporate insolvency