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Companies (Share Capital and Debentures) Amendment Rules, 2022

The Ministry of Corporate Affairs vides its Notification No. G.S.R. 335(E) dated. 04th May 2022 has notified Companies (Share Capital and Debentures) Amendment Rules, 2022 to amend the existing Companies (Share Capital and Debentures) Rules, 2014. This notification came into force on the date of its publication in the Official Gazette i.e., 04th May 2022. The present article briefs the Companies (Share Capital and Debentures) Amendment Rules, 2022. For more details, How to reduce the share capital of the company?

Synopsis of Companies (Share Capital and Debentures) Amendment Rules, 2022

The amendment under the Companies (Share Capital and Debentures) Rules pertains to the insertion of a declaration in form SH-4 (form for transfer of shares) with regards to whether the transferee is required to obtain Government approval under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 prior to the transfer of shares or not. In case no such approval is required then the transfer will take place in the normal course of action whereas if such approval is required to be obtained then it is mandatory to enclose the approval letter with form SH-4.

Form No.SH-4 - Securities Transfer Form

As per section 56 of the Companies Act, 2013 read with Rule 11 of the Companies (Share Capital and Debentures) Rules, 2014, a transferee is required to send Form SH-4 to the Company within 60 days from the date of execution of share transfer agreement along with the share transfer certificate. This is the most important instrument of transfer through which the process is initiated. The transferor will have to submit the SH4 that is duly executed, dated, and stamped to the company. The SH4 contains the following information:

Execution date
CIN of the company
Name of the Company
Class of the securities
Nominal value/ Amount called up/ Amount paid up of the securities.
The securities that are to be transferred at a consideration or Rs... Distinctive no. of shares, certificate no.
Name of the transferor along with his Folio No, Signature. Also the same should be witnessed.
Name of the transferee along with the details like Father’s name, address, Email id, occupation, Folio, and Signature.
The instrument of the transfer should be duly stamped as per the Indian Stamp Act. of 1899.
Once all the details are submitted then the same company will see if everything is in place and will register the same. A share certificate is issued and endorsed, to the transferee within one month of the receipt of the Instrument of Transfer.

For more details on Share Transfer, click here

Amendment in the Annexure, in Form No.SH-4

The MCA has notified the Companies (Share Capital and Debentures) Amendment Rules, 2022 whereby ‘Securities Transfer Form’ i.e. Form SH-4 has been revised to include a declaration from the transferee that “no Govt. approval is required under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 prior to the transfer of shares or where the transferee is required to obtain the Government approval prior to the transfer of shares, the same has been obtained and is enclosed herewith the form. 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- The transferee is not required to obtain the Government approval under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 prior to the transfer of shares; or The transferee is required to obtain the Government approval under the Foreign Exchange Management (Non-debt Instruments) Rules, 2019 prior to the transfer of shares and the same has been obtained and is enclosed herewith. The official notification pertaining to the Companies (Share Capital and Debentures) Amendment Rules, 2022 is as follows: