Q. Write a comprehensive note on law and procedure of transfer of shares in a

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Q. Write a comprehensive note on law and procedure of transfer of shares in a company registered under companies ordinance. (1994) (1999)
Q. Write a comprehensive note on the law and procedure of transfer of shares in a public limited company. under what circumstances the directors can refuse the registration of transfer. 92002) (2003)
1. Introduction:
An authorized capital of a company is divided into small parts. every part is called share. the shares of a public company are moveable property. public limited company offers the shares to public through prospectus. the person who purchases shares is called shareholder. under companies ordinance 1948, a share holder can transfer his shares by following the a company shall have a distinctive number.
2. Definition of share:
(i) Under companies ordinance:
A share means a share in the share capital of a company.
(ii) According to justice farewell:
A share is the interest of the shareholders in the company. it is measured by the sum of money for the purpose of liability in the first place and of interest in the second place.
3. Nature of share:
(a) Transferable:
Share of a company can be transferred.
(b) Moveable property:
Share is the moveable property of a company.
(c) Not refundable:
Share is not refundable.
(i) Exception:
In case of
(a) Winding up of a company or
(b) Reduction of share capital it is refundable.
4. Kinds of share:
Following are the main kinds of share.
(i) Ordinary shares.
(ii) Preferred share.
(iii) Deferred share.
5. Transfer of share:
Share is a moveable property of a company. it can be transfer in the manner provided by the articles of association of the company.
6. Who can transfer the share:
A share holder has power to transfer his shares.
7. Determination of vale of shares:
The value is measured by the nominal amount of the share and by the right and obligations relating to it as defined by the companies ordinance.
8. Allotment of shares:
Allotment is the appropriation to a person of a certain number of shares. an application for share is an offer to take the share where as the allotment is acceptance to that offer by the company. the application can be withdrawn at any time before acceptance is communicated.
9. Restrictions on transfer of shares:
Shares are freely transferable unless the company's articles of association impose restriction on such transfer from one person to another.
10. Procedure of transfer of share:
I. Application:
An application for transfer of share is made. transferor or transferee can make application for the transfer of share.
(a) In case application is made by the transferor:
where the application is made by the transferor and the shares transferred are partly paid, the company should give a notice thereof to the transferee. if no objection is raised to the proposed transfer by the transferee with in the thirty days from the date of receipt of the notice, the company may register the transfer.
(b) In case application is made by transferee:
If the application is made by the transferee or Shares are fully paid, no notice is necessary.
II. Execution of instrument of transfer:
The instrument of transfer must be executed both by the transferor and transferee.
Particulars of instrument:
(i) Name of the transferee.
(ii) Address of the transferee.
(iii) Occupation of the transferee.
III. Stamps on instrument:
The instrument of transfer should be duly stamped.
IV. Delivery to company:
The instrument should be delivered to the company alongwith the certificate relating to the shares transferred.
V. Prescribed form:
The instrument of transfer should be in prescribed form.
VI. Examination of instrument of transfer:
Instrument of transfer will be examined by te authority.
VII. Approval of transfer:
The transferred is presented to the board of director, where the transfer is approved.
VIII. Issuance of new certificate:
New certificate is signed and sealed according to the regulations of the company and handed over to the new shareholder.
11. Circumstances when transfer is refused by director of the company:
Director of the company can refuse to register the share in the following circumstances:
(i) If the transfer instrument is defective.
(ii) If the transfer instrument is invalid.
(iii) Company has line on the shares.
(iv) The calls on the shares are up-paid.
(v) If transferee in not approved by the company.
12. Conclusion:
To conclude i can say that shares of a public company are moverable property. they are transferable in the manner provided by the articles of association of the company. an application for the transfer of shares has to be made either by the transferor or by the transferee. the directors cannot refuse the registration of transfer of full paid-up shares unless transfer instrument is defective or invalid. the court will not interfere with their discretion of refusal unless it can be shown that they did not bona-fide.

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