Share Transfer in a Private Company
Shares in a private company do not move freely. The articles restrict them, and a transfer done casually can be challenged years later.
Restricted by design
A private limited company restricts the transfer of its shares — that restriction is part of what makes it private. Your articles will set out how: often a right of first refusal to existing shareholders, board approval, or both.
Ignoring that process is where trouble starts. A transfer made without following the articles can be challenged by other shareholders, and the register can be rectified against the buyer. Since the buyer usually paid money, this is not an academic risk.
Read the articles before agreeing anything. If they contain a right of first refusal, the existing shareholders have to be offered the shares first, on the terms specified, whether or not everyone is friendly today.
What has to happen
Check the articles
The process they set out is binding. Skipping it is the main way transfers get unwound later.
Offer to existing shareholders where required
If there is a right of first refusal, this step cannot be waived informally without their written agreement.
Execute the transfer deed
Form SH-4, properly executed, with stamp duty paid. Unstamped instruments cause problems on the day you need them.
Board approves and registers the transfer
The board records the transfer and the register of members is updated. Until then the buyer is not a member.
Issue the share certificate
The new certificate to the buyer, with the old one surrendered and cancelled.
Keep the paperwork
The register of members and the transfer deeds are what due diligence looks at. Gaps here surface at exactly the wrong moment.
Written 5 September 2026. Government requirements and portal behaviour change — message us to confirm before you rely on any date or figure here.
What people get wrong
- Money changes hands and nothing is filed. Very common in family and founder transfers. The buyer believes they own shares; the register says otherwise.
- Stamp duty not paid. Cheap at the time, expensive when the document has to be relied on.
- Articles ignored. The most serious one, because it makes the transfer challengeable.
- Valuation not documented. A transfer at an unexplained price invites questions from the tax side.
- Register of members not updated. The register is the legal record of who owns the company, not the receipts.
Common questions
Related on this site
The filings and decisions that come up before and after incorporation.