What is a Board resolution for Share Transfers. When a company transfers its shares from one shareholder to another, it must get official approval from its Board of Directors. This approval comes in the form of a Board Resolution for Share Transfer. It’s an essential step that confirms the company has verified the documents and allows the ownership of shares to change legally.
📘 1️⃣ Meaning of Board Resolution for Share Transfer
A Board Resolution is a formal decision passed by a company’s board during a Board Meeting. When it relates to share transfer, it means the directors have reviewed the request, verified the documents, and agreed to record the transfer in the Register of Members.
In simple terms, this resolution acts as the company’s official permission slip to transfer shares from one person (transferor) to another (transferee).
📄 2️⃣ Legal Basis under Companies Act, 2013
Under Section 56 of the Companies Act, 2013, a company can record a share transfer only after the Board of Directors approves it through a formal resolution.
This ensures:
✅ The transfer complies with legal procedures
✅ All necessary documents, including Form SH-4, are properly submitted
✅ The company’s records are updated without errors
Thus, the resolution is both a legal safeguard and a procedural requirement.
🧾 3️⃣ Key Details Included in a Board Resolution
A proper Board Resolution for Share Transfer usually contains the following components:
| Field | Details Required |
|---|---|
| Meeting Details | Date, time, and location of the Board Meeting |
| Transferor Name | Name of the person selling or transferring the shares |
| Transferee Name | Name of the person receiving the shares |
| Number of Shares | Quantity and class of shares being transferred |
| Consideration | Price or value agreed for the shares |
| Form SH-4 | Reference to the transfer form submitted |
| Effective Date | Date on which the transfer becomes valid |
| Authorization | Approval to issue a new share certificate |
Each of these elements ensures transparency and legality during the transfer process.
🧩 4️⃣ Step-by-Step Process of Passing a Board Resolution
Here’s how companies generally pass a resolution for share transfer:
1️⃣ Receive the request – The company receives a share transfer form (Form SH-4) with all documents and signatures.
2️⃣ Verify documents – The Board checks details like share certificates, signatures, and stamp duty payment.
3️⃣ Convene a Board Meeting – The company secretary issues a notice for the meeting.
4️⃣ Present the transfer proposal – The Managing Director or authorized officer presents the proposal for approval.
5️⃣ Pass the resolution – Directors vote and pass the resolution approving the transfer.
6️⃣ Update the Register of Members – The company records the transfer in official registers.
7️⃣ Issue a new share certificate – The company issues a new certificate in the name of the transferee.
💡 Tip: Always file the resolution in the company’s official records and maintain minutes for future reference.
🧠 5️⃣ Sample Format of Board Resolution for Share Transfer
Below is a simple sample format for reference:
BOARD RESOLUTION FOR APPROVAL OF SHARE TRANSFER
“RESOLVED THAT the transfer of ___ equity shares of ₹___ each of the Company, from Mr./Ms. ___ (Transferor) to Mr./Ms. ___ (Transferee), as detailed in the share transfer form (Form SH-4), be and is hereby approved.
FURTHER RESOLVED THAT the name of the transferee be entered in the Register of Members, and a new share certificate be issued in their name.”
Certified True Copy
For [Company Name]
(Director/Company Secretary)
⚖️ 6️⃣ Importance of a Board Resolution
The resolution ensures the transfer is:
-
🛡️ Legally compliant under the Companies Act
-
📋 Properly recorded in the Register of Members
-
🔍 Transparent and auditable for future verification
Without the Board’s formal approval, a share transfer cannot be recognized by the company.
✅ Final Thoughts
A Board Resolution for Share Transfer is more than just a procedural formality—it’s a legal requirement that protects both the company and its shareholders. By passing this resolution properly, companies can ensure smooth ownership transitions and maintain strong corporate governance.
Hope you get the clarity about What is a Board resolution for Share Transfers.