Share Transfer of Shares of Wholly Owned Subsidiary Company

[falguni shah]

Dear Members,

My company is a wholly owned subsidiary company (private company), 100 % held by the Holding company and there is 1 nominee shareholders, who hold 1 share as Nominee on behalf of the Holding  company . 

We want to transfer the shares to individual i.e to both the directors. which indeed change the whole scenario i.e from Wholly Owned Subsidiary Company to Non Subsidiary. Can we do this with the route of Share Transfer?

If yes than at what price? The company has Profit of Rs.23,000/- in previous FY 2022. The Face Value of Share is Rs.10/- and Book Value is Rs.32/-. Can transfer share at Book Value or we need to get valuation done for this share transfer.

Can some one please help me in arriving at the solution. 

[vaibhav gupta]

Hi,

The transfer of shares is purely governed by AOA of private company. Other than AOA no restriction on such transfer.

Reg valuation, no requirement under Cos Act; But mandatory pricing under IT Act u/s 56. 

Ideally price determined under Income Tax Act should be considered for the pricing of shares for transfer.

​Feel free to speak to undersigned for any query

Best Regards,

CA. Vaibhav Gupta, FCA, DISA (ICAI), RV- SFA 

CCCA (ICAI), CCMSME (ICAI)

LAKHOTIA GUPTA & COMPANY

Chartered Accountants 

NCR | KANPUR | BENGALURU | LUCKNOW 

Website: calgc.in

Contact: +91-9554950715