1. Free Transferability of Shares

• Shares of a Public Limited Company are freely transferable unless restricted by law or internal agreements.
  
• This is a core feature that distinguishes it from private companies.
  
• Shareholders can sell or transfer their shares to any person without board approval.
  
• Freely transferable shares enhance market liquidity and investor participation.
  
• This helps in raising capital and facilitating open ownership.
  

2. Transfer Procedure for Physical Shares

• The shareholder must submit a duly executed share transfer deed (Form SH-4) along with the original share certificate.
  
• The deed should be properly stamped as per the Indian Stamp Act.
  
• The company records the transfer in its register of members after verification.
  
• A new share certificate is issued to the transferee within the prescribed time.
  
• This method is used when shares are not held in dematerialized (electronic) form.
  

3. Transfer of Dematerialized Shares

• Most listed public companies maintain shares in demat (electronic) form through depositories like NSDL or CDSL.
  
• The shareholder initiates the transfer through a Depository Participant (DP).
  
• The DP debits shares from the seller’s demat account and credits the buyer’s account.
  
• The process is fast, secure, and does not require physical documents.
  
• The company is informed automatically through the depository system.
  

4. Role of Stock Exchanges and Market Trades

• For listed companies, shares are traded on recognized stock exchanges such as the BSE or the NSE.
  
• Buyers and sellers conduct transactions through registered brokers.
  
• The stock exchange facilitates trade settlement, usually within T+1 day.
  
• Shareholding changes are reflected in demat accounts without direct company involvement.
  
• This promotes transparency and regulatory oversight in share transactions.
  

5. Recording and Compliance

• The company must update its register of members to reflect the new ownership.
  
• The transfer must comply with the provisions of the Companies Act, SEBI regulations, and depository rules.
  
• Proper records ensure rightful dividend distribution, voting rights, and legal ownership.
  
• In case of disputes, the company refers to the share transfer records for verification.
  
• Accurate maintenance of transfer history is essential for audits and shareholder rights.