Any shareholder who wishes to transfer his/her shares in a sdn bhd company must notify the directors of the Company and he/she must complete the Form 32A.
Section 103 of the Companies Act 1965 requires all transfer instruments to be in a prescribed form, that’s Form 32A.
The Form 32A contains the following information:
- Company’s name
- Details of existing shareholders (transferor),
- Details of new shareholder (transferee)
- Number of shares transferred
- Value of shares transacted
The signatures by transferor & transferee in the Form 32A must be witnessed.
The following are step-by-step guide for the transfer of shares in a company:
Step 1: Secretary to prepare board resolution & Form 32A
The Company Secretary will at the request of the directors to prepare the Board Resolution for directors to approve the transfer of shares and the Form 32A (to be signed by existing shareholder & new shareholder) for the relevant shares to be transferred.
Step 2: Original share certificate to be returned to secretary
The share certificate for the shares to be transferred must be returned to the company secretary for cancellation.
Step 3: Stamping on Form 32A & payment of stamp duty
Once the transfer has been approved by the Board of directors and the Form 32A has been executed, the Form 32A will be delivered to Inland Revenue Board (IRB, also known as Lembaga Hasil Dalam Negeri) for assessment. Stamp duty will be paid to IRB to validate the transfer.
Step 4: Issuance of new share certificate to new shareholder
The company secretary will then enter the new shareholder’s name into the Register Book and issue the new share certificate to the new shareholder.
When will the transfer of shares be refused?
Shares are transferable except to the extent that the articles may restrict the right of transfer.
The following may the situations where the transfer is restricted:
- a power to the directors to decline to register a transfer of shares either to their absolute discretion or on one or more specific grounds; and
- a right of pre-emption of other members over shares which a member wishes to transfer.
What is directors’ power to refuse the transfers?
The directors’ power to refuse the transfers is subject to three requirements:
- the directors must exercise their power by a decision probably reached at a board meeting;
- the power of refusal lapses unless it is exercised within a reasonable time (within one month);
- the power must be exercised in good faith for the benefit of the company.
What is members’ right of pre-emption?
The articles, which usually contain elaborate rules of procedure if a right of a pre-emption is given, must be followed exactly.
The other members must exercise their right within the time allowed and take all and not merely part of the shares offered (unless articles otherwise provide.)
Both parties are bound by any fair value fixed as the price to be paid in accordance with the articles.
Fourth Schedule (Table A) of the Companies Act, 1965, Regulations For Management Of A Company Limited By Shares:
Subject to these restrictions of these Articles, shares shall be transferable but every transfer shall be in writing in the usual common form or in such other form as the directors shall from time to time approve, and shall be left at the office accompanied by the certificate of the shares to be transferred and such other evidence (if any) as the directors may reasonably require to show the right of the transferor to make the transfer.
The instrument of transfer of any share shall be executed by or on behalf of the transferor, and the transferor shall be deemed to remain the holder of the share until the name of the transferee is entered in the register of members in respect thereof.
The registration of transfers may be suspended at such times and for such periods as the directors may from time to time determine, provided always that such registration shall not be suspended for more than thirty days in any year.