Govt okays share transfers before new Companies Act

Asks companies to carry out registrations even if the transfer was executed under the old regime

The ministry of corporate affairs (MCA) has clarified share transfer forms executed before the Companies Act came into effect from April 1  can be accepted by companies.

A clarification had been sought on whether the transfer under the Companies Act of 1956 would be valid. Companies had refused to register the transfers on account of this. The government had received representations from sector bodies, professional institutions and other stakeholders, according to an MCA circular.

The move would allow companies to okay delays in applying for the registration of share transfers after these were executed, given these are satisfied with the reason for the delays.

The Securities and Exchange Board of India, which regulates the stock markets in the country, communicated the ministry's stance through a letter to exchanges on August 14. The BSE website carried a copy on August 20.

MORE CLARITY

• Share transfers once executed have to be registered by a company
• It was felt that share transfers executed during the old regime could not be registered when the new Companies Act came into effect
• Sector bodies and other organisations have made representations saying that many companies were refusing to register such share transfers
• Exchange notification now says companies can do so
• Notification cites a letter from Sebi, which received a communication from the government

The circular went on to add if the transfer form was not filed within a prescribed period, the company could look to see if the delay was justified and if it decided not to accept the form, reasons were to be conveyed under the relevant sections.

 

The ministry had issued the said circular on June 12.