SH-4: Share Transfer in Private Limited Company — Process & Documents

What is Form SH-4?

Form SH-4 is the share transfer deed under Section 56 of the Companies Act, 2013 used to legally transfer shares from one shareholder to another in a Pvt Ltd or Public company. It captures:

• Transferor (seller) and transferee (buyer) details
• Number and class of shares transferred
• Distinctive numbers, folio numbers
• Consideration amount
• Stamp duty paid
• Witness signatures

Pre-transfer checks for Pvt Ltd

Before transferring shares, verify:

1. AoA restrictions — Most Pvt Ltds have pre-emption rights (existing shareholders must be offered first), right of first refusal, or board approval requirements
2. SHA/Investor agreements — Investor consent may be required (drag-along, tag-along, ROFR clauses)
3. FEMA compliance — If transfer is between resident and non-resident, FC-TRS filing needed
4. Capital gains tax — Seller's tax liability (LTCG/STCG depending on holding period)

Step-by-step process

1. Buyer-Seller agreement — Draft SPA (Share Purchase Agreement) outlining price, conditions, representations
2. Comply with AoA — Offer to existing shareholders if ROFR applies; obtain waivers
3. Execute SH-4 — Both parties sign; witnesses sign
4. Pay stamp duty — 0.015% on consideration or fair value (whichever is higher); paid via e-stamp or physical stamps
5. Submit to company — Within 60 days of execution with original share certificate
6. Board approval — Board meeting passes resolution approving transfer (Section 56(1) reads with AoA)
7. Update Register of Members — Within 7 days of board approval
8. Issue new share certificate — In transferee's name; cancel old certificate of transferor
9. Update statutory records — Index of members, beneficial owner register

Stamp duty calculation

Stamp duty on share transfer is 0.015% of consideration value (or fair value if higher), under Article 62(a) of Indian Stamp Act:

• ₹10 lakh transfer → ₹150 stamp duty
• ₹1 crore transfer → ₹1,500
• ₹10 crore transfer → ₹15,000

Payable in the state where transfer is executed. For Maharashtra, Karnataka and most states, e-stamp paper is the cleanest mode.

Special cases

• Transmission (death of shareholder): Use Form SH-13 (Nomination) or court succession certificate. No SH-4 needed.
• Cross-border transfer (resident to non-resident or vice versa): File FC-TRS with AD Bank within 60 days. Pricing must comply with FEMA valuation.
• Buyback by company: Different process (Section 68, SH-11 form), not share transfer.
• Gift transfer: Same SH-4 process but with NIL consideration. Income tax implications apply (Section 56(2)(x) for receiver above ₹50k).