Transfer of shares is a transaction resulting in a change of share ownership. A shareholder, whether in public or private company, has a property in his share which he has a right to dispose of, subject only to any express restriction which may be found in the articles of the company.Transmission is the automatic process; when a shareholder dies, his shares immediately pass to the personal representatives or, if a member is declared bankrupt, their shares will vest in the trustee in insolvency. As per Act, 1996 provides for an alternate tool for effecting transfer of shares. Investors have the choice of continuing with the existing share certificates and adopt the existing mode of effecting their transfer.
Every depository is registered with the SEBI and receives a certificate of commencement of business on fulfillment of such conditions. Upon entry into the system, share certificates belonging to the investor will be dematerialized and their names entered in the books of participants as beneficial owners. The investor’s names in the register of companies concerned will be replaced by the name of the depository as the registered owner of the securities. The investors will, however, continue to enjoy the economic benefits from the shares as well as voting rights on the shares concerned.