Transfer of shares: Legal procedure
I work in a Pvt Ltd Company, having shares as 100. There are 3 Directors, out of which my dad is one, having (31.63% shares). One of his brother who is shareholder wants to gift the shares to me through Gift deed & paying Stamp Duty. Do we need to get it approved from board & what if the board don't approve it due to some personal problem. Board Members - Other 2 Directors having (51.54% shares) are reluctant to approve the same. Company Article of memorandum says --- Board may on behalf of Company & at its own absolute & uncontrolled discretion & without assigning any reason, decline to register or acknowledge any Transfer of Shares but in such case it shall, within 2 months from the date on which the instrument of transfer was dodged with the Company, send to the Transferee & Trasnferror notice of the refusal to register such Transfer & return the documents lodged as aforesaid to the Transfer-or. Please advise how to handle the situation & get regularized Share Transfer.
As long as the Board is getting the unlimited power to not approve the required Share Transfer, they can very well reject to acknowledge the same. The only option left would be challenging the AOA in the Company Law Tribunal on the ground of being arbitrary to the freedom of business and profession. However this shall be a challenging task as the Tribunal does not easily accept AOAs to be arbitrary and illegal.
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