How to revalidate a transfer deed

We've talked about how to transfer shares, and by when they can be transferred. The buyer must send street shares for transfer within the period that the transfer deed is valid. The validity of the transfer deed has been defined in The Companies Act, 1956 under Section 108(1-A) which states:

"------- In the case of shares dealt in or quoted on a recognised stock exchange, at any time before the date on which the register of members is closed, in accordance with law, for the first time after the date of presentation of the prescribed form (transfer deed) to the prescribed authority (registrar of company) or within twelve months from the date of such presentation, whichever is later---------."

In layman terms: A transfer deed has a date stamped on the face, which has been put there by the competent government authority. The transfer deed is valid for sending shares for transfer till the first book closure of the company after this date or for one year from this date, whichever is later.

 

What happens when the time for transfer elapses?

Worried because you've failed to meet the deadline for transfer? You must be in a cold sweat seeing your investment going down the drain. But don't you know: where there's a problem, your Sherus have a solution. The stock market is not that bad a place. We will tell you how to get these shares transferred even after the time stipulated has elapsed.

What you now need to do is get the transfer deed revalidated.

To get a transfer deed revalidated, you need to fill out a form (Form # 7-C) and along with the invalid transfer deed, take it to the Registrar of Companies' office. The form can be procured from the Registrar of Companies' office or alternatively at Tax print. There, on submission of the application for revalidation and the fees as prescribed, the office will give you a period of validation for the transfer deed. This period of validation is one month. Now, within this period of validation, you need to send these shares for transfer. What this means is that the shares should reach the transfer agents of the company within the extension period that has been granted.

Here's the process in tabular form:

1. You fill out Form # 7-C
2. The form is available at the Registrar of Companies office or with Tax print.
3. You can apply with the Registrar of Companies' office - either in the city where the applicant resides or where the company, whose shares have to be transferred, is situated.
4. The applicable fee is based on the value of shares as follows:
1. Up to Rs5,000, the fee is Rs50
2. Above Rs5,000, the fee is Rs100

Points covered in the form

To ensure that the form (Form # 7-C) is complete, we will run through a brief of the points covered in the form:

1. Name of the company whose shares are to be transferred is to be filled correctly.
2. Name and address of the person seeking the extension. This can be different from the transferee (buyer), but usually they are the same.
3. Number of transfer deeds and value of the shares being transferred.
4. Name of the transferee (buyer) of shares.
5. Original date of execution of the transfer deed.
6. Date of expiry of the period of validity of the transfer deed in question. (i.e. one year or the book closure date, whichever is earlier)
7. Whether the applicant is still the rightful holder of the transfer deed.
8. Name of the seller.
9. Reason for the extension.
10. Details of the fees being paid for the application.

Finally, the applicant signs the application and puts in the date. The form is ready for submission along with the required fee.

The legal implications

This extension of transfer deed is sought under Section 108 (1-D) of The Companies Act, 1956. It is assumed that the applicant and other parties to the transfer deed to be revalidated are fully aware of the contents of this section and its legal implications.

Section 108D basically empowers the central government to direct companies not to give effect to any transfer of shares if, as a result of such transfer, a change in the controlling interest of the company concerned, prejudicial to the interests of the company or public interest, is likely to take place. The power is extended to a restoration of the status quo ante.

This power of the central government to grant extension of time has been delegated to the Registrar of Companies.

We end this session with the first step for you to take:

STEP 1 - Dig into your boxes/safety vaults/bank lockers/whatever NOW and hunt for all those shares you bought but did not send for transfer.