Today investing under shares is a common practice, but when it comes to transferring of shares, most of the people get stuck as the procedure for the same is not known to them. Before understanding the procedure to transfer of shares lets first understand the reasons due to which one transfers his shares. Majorly there are two reasons for transfer or shares i.e not satisfied with the services of current Depository Participant (DP) so want to transfer shares to some other DP or transfers his shares to someone else account either as gift or otherwise. But the best part is whatever the reason of transfer of shares the procedure for the same is almost same. So lets have a look how you can transfer your shares:-
When we plan to transfer our shares to someone else account either as gift or otherwise you as transferor will be called as donor and the one who will receive your shares will be called as donee. Then you as a donor have to contact your depository participant for the submission of delivery instruction slip (DIS) for the transfer of shares from your account to donee account.
Here comes the question what is Delivery Instruction Slip (DIS)? What is the use of it?
DIS is a form which is used for the transfer of shares it is like a cheque book on which client name and client id is printed. Account holder uses this slip to instruct DP for the transfer of shares. Which means the instructions given in this form tells DP which demat account to debit and which to credit with shares. DIS will contain the details like name of the donee DP, account number of the donee which needs to be credited with shares, number of securities, ISIN number of the company and details of the securities which needs to be transferred to the donee account.
To formally accept the shares, donee will also have to submit a receipt instruction to his DP to get the transfer done.
Note : If this transfer of shares is done for the purpose of gift then it is always better to get a gift deed done on a non judicial stamp paper for legal records and to avoid tax questions.
ALSO READ : Income Tax (IT) Implications On Gift Received
If shares which needs to be transferred is in certificate form i.e Physical form then donor needs to fill, sign and register Form 7B. The donor will have to pay the stamp duty for the registration of transfer deed. The stamp duty for the same will be 25 paise for every Rs 100 face value or the market value of the shares prevailing on the date of the document, whichever is higher. To save this effort and money, donor can get these shares transferred into demat form before gifting. This will eliminate this effort and money as in case of dematerialized shares, transfer is done online through NSDL or CSDL.
For Transfer Of Shares?
Send signed share certificates, registered share transfer form along with other documents (if any) like gift deed to the Registrar & Transferor Agent (RTA) of the company.