Our Recommendations :-
Follow CA Final FB Page

Explain the cases when a company can refuse registration of transfer?

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 kruthika asked almost 3 years ago

Hi, Can you tell me about the cases when a company can refuse registration of transfer?

    0       0 Answer Now Comment Report
4 Answers
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 acharya answered over 2 years ago

Reasonable restrictions can be imposed by a Private Company only under the provisions found in the Articles of Association. There are 2 kinds of provisions which can be incorporated in the Articles of the Company for this purpose. They are: In Bajaj Auto Limited v. Company Law Board , it was held by the Supreme Court that the power of the Board of Directors to refuse registration of transfer of shares must be in the interest of the company and the general body of share holders.

    0       0 Comment Report
Important Note – Preparing for CA Final?
CAKART provides Indias top faculty each subject video classes and lectures – online & in Pen Drive/ DVD – at very cost effective rates. Get video classes from CAKART.in. Quality is much better than local tuition, so results are much better.
Watch Sample Video Now by clicking on the link(s) below – 
For any questions Request A Call Back  
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 veeru answered almost 3 years ago

Reasonable restrictions can be imposed by a Private Company only under the provisions found in the Articles of Association. There are 2 kinds of provisions which can be incorporated in the Articles of the Company for this purpose. They are: Power of Directors to refuse transfer of shares. In Bajaj Auto Limited v. Company Law Board , it was held by the Supreme Court that the power of the Board of Directors to refuse registration of transfer of shares must be in the interest of the company and the general body of share holders.

    0       0 Comment Report
Picsjoin 2017224123730582 Archana answered almost 3 years ago

Hie Kruthika, **Restrictions in case of Private Company** Reasonable restrictions can be imposed by a Private Company only under the provisions found in the Articles of Association. There are 2 kinds of provisions which can be incorporated in the Articles of the Company for this purpose. They are: - Power of Directors to refuse transfer of shares. In Bajaj Auto Limited v. Company Law Board , it was held by the Supreme Court that the power of the Board of Directors to refuse registration of transfer of shares must be in the interest of the company and the general body of share holders. - Pre-emptive rights. A right of pre-emption is incorporated in the articles of a Private Company to restrict the members’ right to transfer shares to non members. Under Sec 111, Refusal to register the transfer of shares can be done only on the ground of restrictions contained in the Articles of Association. This was also upheld by the Supreme Court in the case of V.B Rangaraj Vs. V.B. Gopalakrishnan **Grounds on which a Public Company can refuse to register transfer** - The only ground on which a Public Company may refuse a transfer is on some “sufficient cause”. The Proviso to sub-section (2) of Sec. 111A provides that, If a company without sufficient cause refuses to register transfer of shares within two months from the date on which the instrument of transfer or the intimation of transfer, as the case may be is delivered to the Company, the transferee may appeal to the Tribunal and it shall direct such company to register the transfer of shares. - In Estate Investments Company P. Ltd. v. Siltap Chemicals Ltd. the Company Law Board laid down the scope of the words “sufficient cause”. The opinion of the CLB was that only those grounds would constitute a sufficient cause on which the CLB can order rectification of the Register of Member of Company under S. 111A(3).

    0       0 Comment Report
Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 shalu answered almost 3 years ago

A private company can refuse to register the transfer of shares in favor of any person in terms of the provisions of articles of association of the company.However, while refusing to transfer shares, the power must be exercised by board bona fide and in the best interests of the company. The securities of a public company are freely transferable and the boards of directors and the concerned depository has no discretion to refuse or withhold transfer of any securities on any ground, expect on the ground of prescribed sufficient cause.

    0       0 Comment Report
Similar Questions
Get Notifications
Videos
Books
Notes
Loading
SIGN UP
Watch best faculty demo video classes

These top faculty video lectures will
help u prepare like nothing else can.