Important Keywords: Form SH-4, SH-4 share transfer form, Form SH-4 Companies Act 2013, Share transfer deed India, SH-4 process India, Section 56 Companies Act, SH-4 stamp duty India, share transfer physical shares India, SH-4 time limit 60 days, SH-4 penalty.
Last Updated: March 2026 (As per latest MCA amendments), Words: 2,563, Read time: 14 minutes.
Table of Contents
Overview
In the corporate world, transfer of shares is a common but legally important process. Whether it is a private company, a family-owned business, or a public limited company, shares can move from one shareholder to another. However, this transfer must follow the rules of the Companies Act, 2013 and the related regulations.
The main document used for this process is Form SH-4, which is known as the Share Transfer Deed. This form works as the official document for transferring shares from one person to another. If this form is not properly filled, signed, and submitted, the company cannot legally recognize the transfer of shares.
Therefore, Form SH-4 is not just a simple formality. It is a legal document that ensures transparency, proper record-keeping, and compliance with corporate laws in India. This article explains Form SH-4, its purpose, requirements, procedure, legal importance, and the common mistakes that companies and investors should avoid.
Quick Summary of Form SH-4
Purpose: Transfer of shares
Applicable Law: Section 56, Companies Act 2013
Form Type: Physical (not MCA filing)
Due Date: 60 days
Stamp Duty: Applicable
What is Form SH-4?
Form SH‑4 is the Securities Transfer Form used to transfer shares under Section 56 of the Companies Act, 2013 and sub-rule (1) of Rule 11 of the Companies (Share Capital and Debentures) Rules, 2014.
- A share transfer happens when the transferor voluntarily hands over their shares to the transferee.
- The instrument of transfer (Form SH‑4) must be signed by both transferor and transferee.
- It must be delivered to the company along with the share certificate within 60 days of signing.
- If not delivered within 60 days, the company can still register it if the board is satisfied with terms of indemnity.
Based on MCA provisions, Companies Act rules, and practical compliance experience, Form SH-4 is a critical document for lawful share transfers in India.
*The transfer is registered with the company, not with the MCA.
Why Form SH-4 is Important for Share Transfer in India?
Form SH‑4 is basically the backbone of share transfers in India. It’s the official document that proves a shareholder has sold or transferred their shares to someone else. Without it, the company won’t recognize the new owner, and the buyer won’t get rights like voting or dividends.
It also keeps everything compliant with the law. The Companies Act, 2013 makes it mandatory to use SH‑4, pay the right stamp duty, and submit it within 60 days. This way, both the seller and buyer are protected, and the company’s records stay accurate.
Think of it as the bridge between the old shareholder and the new one. Once SH‑4 is properly filled, stamped, and submitted, the company updates its register of members, and the new shareholder officially steps into their rights. In short, SH‑4 makes the transfer smooth, valid, and legally recognized.
Essential Part of Form SH-4
See the below Diagram:
Law applicable on this Form SH-4
- Section 56(1) of The Companies Act, 2013: This section says that a company cannot record a share transfer unless it is done using a proper form (Form SH-4). The form must be stamped, signed by both the person giving the shares (transferor) and the person receiving them (transferee), and submitted to the company within 60 days of signing.
- Rule 11 of the Companies (Share Capital and Debentures) Rules, 2014: (Instrument of Transfer)
As per Rule 11 of the Companies (Share Capital and Debentures) Rules, 2014 under the Companies Act, 2013 India:
Rule 11(1): When shares are held in physical form, their transfer must be done through Form SH-4 (Securities Transfer Form). The form should be properly filled, signed, dated and submitted to the company within 60 days of execution.
Rule 11(2): For companies without share capital, the same process applies, but it relates to the transfer of a member’s interest instead of shares.
Rule 11 (3): In the case of partly paid shares, the company must send a notice in Form SH-5 to the transferee. The transferee is given 2 weeks to raise any objection, and if no objection is received, the company can proceed with registering the transfer. - Indian Stamp Act, 1899: According to the Stamp Act, the share transfer form must have the required stamp duty affixed. This makes the transfer legally enforceable and avoids any future disputes.
In short: Form SH-4 is both a legal requirement and proof of transfer, protecting the rights of both the person giving the shares (transferor) and the person receiving them (transferee).
Procedure for Execution of Form SH-4
Here are the procedures to follow step-by-step instructions:
- Agreement: The seller and buyer agree on the price and number of shares.
- Fill Form SH-4: They fill all the details in Form SH-4 (share transfer form).
- Pay Stamp Duty: Stamp duty is paid on the form based on the share value. Stamp duty is generally 0.015% of the consideration amount (may vary slightly depending on state laws).
- Sign the Form: Both buyer and seller sign the form, and it is also signed by witnesses.
- Submit to Company: The form is submitted to the company within 60 days, along with the original share certificate.
- Company Checks: The company verifies all details, signatures, and stamp duty.
- Transfer Completed: If everything is correct, the company updates its records and issues a new share certificate to the buyer.
*In short: Agreement → Fill → Stamp → Sign → Submit → Verify → Transfer
Timeline and Validity of Form SH-4
Form SH-4 must be submitted to the company within 60 days of signing (execution). Once accepted and registered by the company, the transfer of shares becomes legally valid.
Penalties for non-compliance
Before the 2020 Amendment:
Section 56(6) said that if a company or officer defaults in complying with sub-sections (1) to (5), the penalty was a range:
Company: ₹25,000 up to ₹5 lakh
Officer: ₹10,000 up to ₹1 lakh
So, there was flexibility and the ROC could decide the exact amount depending on the case.
After the 2020 Amendment:
Sub-section (6) was substituted to simplify the penalty. Companies (Amendment) Act, 2020 – Section 56(6)
This amendment says that if a company or its officers fail to follow the rules for transferring shares as mentioned in subsections (1) to (5) of Section 56, they can be penalized.
The company and the officer responsible can each be fined ₹50,000 for not complying with the rules.
*This amendment made the penalty fixed and simpler, removing the earlier minimum and maximum ranges.
Common mistake to avoid in form SH-4 execution
Company Details - Write the exact company name and CIN as registered. If listed, mention the Stock Exchange name.
Shareholder Details - Fill in correct names, addresses, and signatures of both transferor (seller) and transferee (buyer).
Share Details - Enter the class of shares, nominal value, number of shares, certificate numbers, and distinctive numbers. These must match the original share certificate.
Consideration - Clearly state the amount paid for the transfer (in figures and words).
Stamp Duty - Pay the correct duty as per the Indian Stamp Act. Affix stamps properly; underpayment or missing stamps makes the deed invalid.
Submission Timeline - Submit SH‑4 to the company within 60 days of execution (signing). Late submission can lead to rejection.
Witness Signature - A witness must sign, with their name and address clearly mentioned.
Attach Certificate - Always enclose the original share certificate with the form.
Company Rules (AoA) - Check the Articles of Association for any restrictions on transfer before filling.
Special situation in share transfer using the Form SH-4?
Here are some special situations where Form SH‑4 is used for share transfers:
Gift of shares: sometimes shares are given as a gift, without any money involved. Even then, SH 4 must be filled and stamp duty paid to make the transfer valid.
Transmission of Shares: Transmission (death/insolvency) does not require SH-4 and is governed by company records and legal documents.
Transfer to Nominee: If a shareholder has nominated someone, the shares can be transferred to that person after the shareholder’s death. SH 4 is used along with proof of nomination and the death certificate.
Foreign to Nominee: When a foreign shareholder’s shares go to their nominee, the transfer must follow FEMA rules. SH 4 must include a declaration that approval is either not required or has already been obtained.
Brief of The Company 2022 Amendment!
Brief of The Company 2022 Amendment!
The Companies (Share Capital and Debentures) Amendment Rules, 2022
MINISTRY OF CORPORATE AFFAIRS NOTIFICATION New Delhi, the 4th May 2022.
G.S.R. 335(E).—In exercise of the powers conferred by sub-section (1) and (3) of section 56 read with sub-sections (1) and (2) of section 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further to amend the Companies (Share Capital and Debenture) Rules, 2014, namely: -
1. Short title and commencement. _ (1) These rules may be called the Companies (Share Capital and Debentures) Amendment Rules, 2022. (2) They shall come into force from the date of their publication in the Official Gazette.
2. In the Companies (Share Capital and Debentures) Rules, 2014, in the Annexure, in Form No.SH-4, before the Enclosures, the following declaration shall be inserted, namely. -
“Declaration:
0 Transferee is not required to obtain the Government approval under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 prior to transfer of shares; or
0 Transferee is required to obtain the Government approval under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 prior to transfer of shares and the same has been obtained and is enclosed herewith.
[F. No. 1/04/2013-CL-V, Part-IV]
MANOJ PANDEY, Jt. Secy.
Note: The principal rules were published in the Gazette of India, Extraordinary, Part-II, section 3, subsection (i), vide number G.S.R. 265 (E), dated the 31st of March 2014 and last amended vide number G.S.R.113 dated the 11th of February 2021. what say this notification and why it comes into force.
This notification simply means that in 2022, the MCA updated Form SH-4 to include a small declaration about FEMA rules. Now, the person receiving the shares (transferee) has to state whether government approval is needed.
If approval is required, they must take it and attach it with the form; if not, they just confirm that no approval is needed.
The official notification pertaining to the Companies (Share Capital and Debentures) Amendment Rules, 2022 is as follows:
Rules 2014 before and after the 2022 Amendment
Here this table showing Form SH‑4 before and after the 2022 amendment:
| Feature | Before 2022 Amendment (2014 Rules) | After Amendment (2022 Amendment) |
|---|---|---|
| Declaration in Form SH‑4 | No declaration regarding FEMA approval. | Declaration added: Transferee must state whether FEMA approval is required or obtained. |
| Foreign Exchange Compliance | Not explicitly mentioned in Form SH‑4. | Explicitly requires disclosure about Foreign Exchange Management (Non-debt Instruments) Rules, 2019. |
| Purpose | Only recorded the transfer of shares physically. | Ensures compliance with FEMA for share transfers, especially involving foreign investors. |
| Enclosures | Only share certificate and supporting documents. | Must include FEMA approval document, if required, along with other enclosures. |
| Legal Effect | Transfer valid once SH‑4 submitted and registered. | Transfer requires FEMA compliance declaration to avoid future legal issues. |
This amendment mainly adds a step for checking foreign investment rules to make share transfers more transparent and compliant.
Conclusion
Form SH‑4 may seem like just a paper, but it is an important form. It makes sure that when shares are sold or transferred, everything is legal and safe for both the buyer and the seller.
For companies, following Section 56 and Rule 11 is not just about following the law—it’s about keeping the company’s records correct and honest. For investors or shareholders, SH‑4 ensures you truly own your shares and prevents future disputes.
Getting SH‑4 right keeps share transfers smooth, legal, and hassle-free for everyone involved.
Disclaimer: The information in this article is for general purposes only and may not fit your personal situation. It is not legal, financial, or professional advice, and you should not rely on it as such. Before making any decisions, consider if this information applies to you and, if needed, get advice from a professional. The information is correct at the time of publication. While we have tried to ensure it is accurate, Finodha.in is not responsible for any loss or damage caused by using this information.
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Hi, Go On, Tell Us What You Think about the Form SH-4 filing! Did we miss something to explain in this Article? Come on! Tell us what you think about our article in the comment/e-mail section.FAQs: Get answers to all your queries!
Question. What is the full form of SH-4?
Answer. SH-4 does not have a full form like an abbreviation. It refers to the ‘Securities Transfer Form’ (also known as Share Transfer Form) under the Companies Act, 2013.
Question. What is SH-4 Form?
Answer. SH-4 Form is the Share Transfer Deed specified under Section 56 of the Companies Act, 2013, used for transferring shares from one person to another.
Question. What is the time limit for SH-4?
Answer. The time limit of SH-4 needs to be submitted to the company within 60 days after the shares are transferred.
Question. How to make SH-4?
Answer. Form SH-4 is prepared by filling the prescribed Securities Transfer Form with share details, attaching the share certificate, paying stamp duty, signing it, and submitting it to the company.
Question. What is the purpose of SH-4 Form?
Answer. The purpose of Form SH-4 is to record and complete the legal transfer of shares from one person to another in a company.
Question. Is SH-4 Filled with ROC?
Answer. No, Form SH-4 is not filed with the Registrar of Companies (ROC). It is executed as a Share Transfer Deed between the transferor and transferee, duly stamped, signed, and witnessed, and then submitted to the company along with the original share certificate.
Question. How to file SH-4 in MCA?
Answer. Form SH-4 is not filed on the MCA (Ministry of Corporate Affairs) portal. It is a physical share transfer deed executed between the transferor and transferee.
Q. Does SH-4 need to be stamped?
Answer. Yes, it needs to be stamped properly.
Q. How to fill Form No. SH-4?
Answer. To fill Form SH-4, first enter the company and shareholder information, then provide the details of the shares, attach the share certificate, pay the stamp duty, sign the form, and finally submit it to the company.
Question. When must Form SH-4 be filed?
Answer. Form SH-4 should be filed whenever shares are transferred so the company officially records the new owner and the transfer is legally valid.
Question. Is Stamp duty paid again on the new share certificate?
Answer. No, you don’t pay stamp duty again when the company gives a new share certificate. Stamp duty is paid only once on Form SH‑4 when the shares are transferred. After that, the company can issue the new certificate without any extra charges.
Question. Who pays stamp duty on the share transfer case?
Answer. In the case of a share transfer, the transferee (buyer) usually pays the stamp duty.
Q. In which situations do the transferee need to take approval from the Central Government?
Answer. Central Government approval is required only in cases involving foreign investment under FEMA regulations, not due to delay in transfer.
Question. Is Form SH-4 bullish or bearish?
Answer. Form SH-4 is not bullish or bearish. It is a legal form used to transfer shares from one person (transferor) to another (transferee) as per Section 56 of the Companies Act, 2013.
Question. When must form SH-4 be filed?
Answer. It must be filed with the company within 60 days from the date of the share transfer is signed (executed).
Question. What is the stamp duty on Form SH-4?
Answer. Stamp duty on share transfer is generally 0.015% of the consideration amount or market value (whichever is higher), subject to state variations.
Question. Is Form SH-4 required for transfer of Demat shares?
Answer. No, Form SH-4 is not required for Demat shares. It is applicable only to shares held in physical form. Shares in Demat form are transferred electronically through depositories like NSDL and CDSL, so SH-4 is not needed.
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