Procedure for Transfer of Membership Interest in a Company
Procedure for Transfer of Membership Interest in a Company Without Share Capital
Under Section 56 of the Companies Act, 2013, the transfer of a member’s interest in a company that does not have share capital must be carried out through a duly executed transfer instrument. The document must be signed by or on behalf of both the transferor and the transferee and submitted to the company in accordance with the prescribed requirements.
Further, Rule 11 of the Companies (Share Capital and Debentures) Rules, 2014 prescribes Form SH-4 as the standard form for transfer of securities held in physical form. Rule 11(2) specifically extends the applicability of this form to transfers involving the interest of members in companies without share capital. For this purpose, any reference to “securities” in the form shall be interpreted as referring to the “interest of a member in the company.”
Therefore, in the case of a company limited by guarantee or any company without share capital, Form SH-4 should be used for recording and effecting the transfer of membership interest in compliance with Rule 11(2).
