Most of the company owners and business entrepreneurs get confused while figuring out the difference between transfer and transmission of shares. While many people consider both the same, there lies the major difference between them. Here, we discuss the key differences between the transfer and transmission of shares.
Transfer vs. Transmission
It must be noted that both the transfer and transmission of shares involve the change in ownership of the shares in any company or firm. Transfer of shares means that the shareowner or investor voluntarily changes the ownership of his/her shares by giving them to another individual. However, transmission of shares means that the ownership of shares is changed on account of law. This majorly happens in case of death, inheritance, succession or when the current share owner becomes insolvent or lunatic.
In the case of share transfer, there needs to be a valid instrument of transfer, whereas the transmission of shares doesn’t require the same. These are the key differences between the transfer and transmission of shares.
Transfer of Shares
Transfer of shares require a proper instrument of transfer; duly stamped, dated and executed by or on behalf of the individuals who are either the transferor or transferee with all essential information like name, address, and occupation and more. After which, either the transferor or transferee will deliver the instrument of transfer along with the letter of allotment of securities and receipts to the company within 60 days from the date of execution.
Once the company receives the intimation, the standing transfer committee follows the process and examines all the related documents. After an approval by the committee of the board, the ownership of shares changes and the new registered member/person becomes the new owner of the shares.
Transmission of Shares
As discussed earlier, transmission of shares occurs in case of death, insolvency or lunacy of the shareowner, where the shares are transferred to the legal successor of the deceased share owner as per the operation of law. It is very clear that in the case of transmission, the shareowner is not willingly changing the ownership of his/her shares. Rather, the shares get transferred upon his/her death.
Read Also – What is an unpaid/unclaimed dividend?
In simpler terms, the transfer of shares to the legal successor by operation of law is called as transmission of shares. Once the transmission of shares is properly executed, the successor becomes the new owner of the shares. The person or individual who receives the new ownership of the shares by transmission can either get itself registered as the member or further transfer the shares.
Summary of Differences
|Transfer of Shares
|Transmission of Shares
|Nature of Act
|A voluntary and deliberate act of the shareowner
|The result of the operation of law
|Instrument of Transfer
|It must be executed by both transferor and transferee.
|Shares are transferred for some consideration.
|Shares are transferred without consideration.
|Payable on the market value of the shares.
|No stamp duty required to be paid.
Read also – Process to recover shares from IEPF