In general parlance, “transfer” takes place when title to the property is transferred from one person to another whereas “transmission” refers to devaluation of title by operation of law. Transmission may takes place either by succession or by testamentary transfer. According to Section 44 of Companies Act, 2013, shares, debentures or other interest of a company are moveable property, transferable in the manner provided by the articles of association of the company. A member can also transfer any “other interest” in the company in the manner provided in the articles. For example, a guarantee company may transfer membership interest, suspension of membership or assignment of interest etc. by making special provisions in the articles.
Transmission of shares is a process by operation of law, where under the shares registered in a company in the name of a deceased person or an insolvent person are registered in the name of his legal heirs by the company on proof of death or insolvency and on the establishment of right and title of the heirs on the deceased member’s shares. Transmission of shares takes place when a registered member dies or is adjudicated insolvent or lunatic by a competent Court.
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