Difference between transfer of shares and transmission of shares

Table of Contents

Meaning of Transfer of Shares

Transfer of shares refers to transferring of title to shares, voluntarily, by one party to another.
It is voluntary in nature.
It is affected voluntarily or by the act of the parties.
Consideration must be paid when shares are being transferred.
Liabilities of the parties end on completion of transfer.
Transfer of Shares is initiated by Transferor or Transferee.
Stamp Duty is payable on market value of shares.
Formalities are to be observed as mentioned in section 56
Instrument of Title has to be executed by both Transferor and Transferee
Transfer of shares is not permissible

Transmission of shares refers to the transfer of title of shares by the operation of law.
It is compulsory in nature as it is caused by Operation of Law.
It is affected by Death, Insolvency, Inheritance or lunacy of the parties.
No consideration is paid at the time of Transmission of Shares.
Liabilities of the parties continue to exist.
It is initiated by legal heirs or receivers.
There is no need to pay Stamp Duty.
No formality is required at the time of Transmission of Shares.
Instrument of title is also not required.
Transmission of Shares is permissible.

Basis	Transfer of Shares	Transmission of Shares
Meaning	Transfer of shares refers to transferring of title to shares, voluntarily, by one party to another.	Transmission of shares refers to the transfer of title of shares by the operation of law.
Nature	Voluntary	Compulsory
Affected by	Voluntary/By act of Parties	Death, Insolvency, Inheritance or lunacy of the parties.
Consideration	consideration must be paid.	No consideration is paid
Liability	Liabilities cease on the completion of transfer	Liability continues to exist.
Initiated by	Transferor and transferee	Legal heir or receiver
Execution of valid transfer deed	Yes	No
Stamp duty	It’s payable on the market value of shares	There’s no need to pay.
Lock in Period	Transfer of shares is not permissible.	Transfer of Shares is permissible.
Formalities	Formalities are to be observed as mentioned in section 56	No such formalities are required.
Instrument of Title	It has to be executed by both Transferor and Transferee	Not required.

Author: Shreya Rathor,
Bharati Vidyapeeth Deemed University, Pune, Final Year