56. Transfer and transmission of securities
(1) A company shall not register a transfer of securities of the company, or the
interest of a member in the company in the case of a company having no share capital, other
than the transfer between persons both of whose names are entered as holders of beneficial
interest in the records of a depository, unless a proper instrument of transfer, in such form as
may be prescribed, duly stamped, dated and executed by or on behalf of the transferor and
the transferee and specifying the name, address and occupation, if any, of the transferee has
been delivered to the company by the transferor or the transferee within a period of sixty
days from the date of execution, along with the certificate relating to the securities, or if no
such certificate is in existence, along with the letter of allotment of securities:
Provided that where the instrument of transfer has been lost or the instrument of
transfer has not been delivered within the prescribed period, the company may register the
transfer on such terms as to indemnity as the Board may think fit.
(2) Nothing in sub-section (1) shall prejudice the power of the company to register, on
receipt of an intimation of transmission of any right to securities by operation of law from any
person to whom such right has been transmitted.
(3) Where an application is made by the transferor alone and relates to partly paid
shares, the transfer shall not be registered, unless the company gives the notice of the
application, in such manner as may be prescribed, to the transferee and the transferee gives
no objection to the transfer within two weeks from the receipt of notice.
(4) Every company shall, unless prohibited by any provision of law or any order of
Court, Tribunal or other authority, deliver the certificates of all securities allotted, transferred
or transmitted—
(a) within a period of two months from the date of incorporation, in the case of
subscribers to the memorandum;
(b) within a period of two months from the date of allotment, in the case of any
allotment of any of its shares;
(c) within a period of one month from the date of receipt by the company of the
instrument of transfer under sub-section (1) or, as the case may be, of the intimation of
transmission under sub-section (2), in the case of a transfer or transmission of securities;
(d) within a period of six months from the date of allotment in the case of any
allotment of debenture:
Provided that where the securities are dealt with in a depository, the company shall
intimate the details of allotment of securities to depository immediately on allotment of such
securities.
(5) The transfer of any security or other interest of a deceased person in a company
made by his legal representative shall, even if the legal representative is not a holder
thereof, be valid as if he had been the holder at the time of the execution of the instrument
of transfer.
(6) Where any default is made in complying with the provisions of sub-sections (1) to
(5), the company shall be punishable with fine which shall not be less than twenty-five
thousand rupees but which may extend to five lakh rupees and every officer of the company
who is in default shall be punishable with fine which shall not be less than ten thousand
rupees but which may extend to one lakh rupees.
(7) Without prejudice to any liability under the Depositories Act, 1996, where any
depository or depository participant, with an intention to defraud a person, has transferred
shares, it shall be liable under section 447.