Section 56 of the Companies Act, 2013
Section 56 of the Companies Act, 2013 deals with the transfer and transmission of securities.
Section 56 – Transfer and Transmission of Securities
1. Transfer of Securities
A company shall not register a transfer of securities of the company unless:
A proper instrument of transfer (in Form SH-4) is duly stamped, dated, and executed by or on behalf of both the transferor and the transferee.
This instrument must be delivered to the company within 60 days from the date of execution.
2. Allotment of Securities
For allotment of securities (in case of subscription), details of the allottee and other required information must be filed with the Registrar.
3. Transmission of Securities
In case of transmission (e.g., by succession or inheritance), the company shall register the transmission upon proof of entitlement (e.g., death certificate, succession certificate, etc.), without the requirement of a transfer deed.
4. Time Limits
Every company shall deliver the certificates of all securities:
Within 1 month from the date of receipt of instrument of transfer or intimation of transmission.
Within 2 months from the date of allotment in case of new issues.
5. Penalty for Default
If a company defaults in complying with the provisions:
The company shall be liable to a penalty of ₹50,000.
Every officer in default shall also be liable to a penalty of ₹50,000.
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