What is the Meaning of Share Transferor and Share Transferee. When shares change hands within a company, two key parties play central roles — the share transferor and the share transferee. Understanding their meaning and roles helps ensure that the share transfer process follows all legal and procedural requirements. Let’s explore who they are and how each contributes to a lawful transfer.
🧾 1️⃣ Who is a Share Transferor?
The share transferor is the person or entity who currently owns the shares and decides to transfer them to another person or organization. In simple words, this is the seller of the shares.
For example, if Mr. A holds 100 shares in XYZ Pvt. Ltd. and decides to transfer them to Mr. B, then Mr. A is the transferor.
👉 Key Points About a Transferor:
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The transferor must legally own the shares before initiating a transfer.
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The transferor is responsible for filling and signing the Form SH-4 (Share Transfer Deed).
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They must hand over the original share certificates to the company along with the deed.
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After the transfer, they lose ownership and associated rights in those shares.
💡 In short, the transferor gives up all legal and financial interests in the transferred shares once the company registers the transaction.
👥 2️⃣ Who is a Share Transferee?
The share transferee is the person or entity receiving the shares. This individual or organization becomes the new shareholder after the company approves the transfer.
For instance, if Mr. B receives 100 shares from Mr. A, then Mr. B is the transferee.
👉 Key Points About a Transferee:
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The transferee accepts the transfer by signing the SH-4 form.
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They must provide valid identity and address proofs (such as PAN or Aadhaar).
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The transferee gains rights like voting, dividends, and shareholding benefits only after the company enters their name in the Register of Members.
💡 Simply put, the transferee becomes the new legal owner of the shares after the board approves and updates the company’s records.
🔁 3️⃣ Relationship Between Transferor and Transferee
The relationship between both parties is a legal transfer of ownership. It involves an agreement under which:
| Role | Description | Responsibility |
|---|---|---|
| Transferor | The existing shareholder (seller) | Executes transfer deed, submits share certificate |
| Transferee | The new shareholder (buyer) | Accepts transfer, provides identification proof |
| Company | Approving authority | Approves transfer and updates member register |
✅ The transaction becomes valid and complete only when the company’s Board of Directors passes a resolution and records the transferee’s name officially.
🧭 4️⃣ Why It’s Important to Understand These Roles
Understanding the difference between a transferor and a transferee helps businesses avoid confusion and documentation errors. Since both parties have specific responsibilities, even a small mistake in signing or stamping documents can cause legal complications or delay in share registration.
Moreover, knowing the proper roles ensures transparency, compliance, and smooth processing of share transfers under the Companies Act, 2013.
✅ Final Thoughts
In essence,
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The share transferor is the one who transfers the ownership, and
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The share transferee is the one who receives it.
By completing the correct documentation and following the legal process, both ensure that the transfer is valid, traceable, and compliant with company law.
Hope you get the clarity about What is the Meaning of Share Transferor and Share Transferee.