Shares or securities have characteristics of being transferable. It supports the company in the collection of permanent capital investments from the shareholders. The shareholders can voluntarily transfer shares simply using a contract. Don’t confuse the transfer of shares with the transmission of shares as both hold different meanings and concepts as well. The transmission of shares takes place due to the operation of law, For example- In case the member passes away.
The transfer of shares can only be done with the use of an instrument such as share transfer form or sale deed while in case of transmission of shares there is no need for such an instrument. To know more about the difference between transfer and transmission of shares have a keen look over the classification given below.
Comparison Chart
Comparison Based on
- Transfer of Shares
- Transmission of Shares
Meaning
It can be understood as the transfer of title to shares, voluntarily, from one party to another When the transfer of title to shares done following the operation of law called transmission of shares.
Caused by
- Deliberately conducted by the parties
- Death, inheritance or lunacy of the member
Initiated by
- Transferor and transferee
- Legal successor or receiver
Consideration
- Should be considered adequately
- No consideration required
Execution of Valid Transfer Deed
Yes
No
Stamp Duty
- To be paid on the market value of shares
- No requirement to pay stamp duty
Read Also: Shares and Debentures: Similarities & Dissimilarities
Definition: Transfer of Shares
When an intentional transfer of title (rights as well as duties) of shares takes place from one person to another, it is known as the transfer of shares. The transfer of shares involves two parties i.e., transferor and transferee. The shares of the public company are free to transfer. With the private company, the case is different, here the transfer of shares is prohibited under certain exceptions.
Definition: Transmission of Shares
The cases when shares are transferred due to the operation of law which means on the death of registered shareholders or related scenarios, The transmission of shares includes the transfer of shares to the legal representative of the deceased. However, the company records the transmission only when the transferee provides the proof of entitlement of shares.
Conclusion
The transfer of shares is a common phenomenon and takes place like the transferring of property. The transmission of shares, on the other hand, occurs on a certain event likewise demise of the shareholder or any other operation by law.
