Chandrasekhar Committee

Transfer of shares is a basic need for anyone, whether it is physical or title ownership; however, a procedure must be followed to transfer these shares. On the other hand, the Chandrasekhar committee was formed to rationalize the foreign investment norm and the transfer of shares in the company. The Sebi’s Chandrasekhar committee is critical to reform India’s tax system and foreign investment. As a result, it becomes crucial for our country, and in this article, we will learn everything there is to know about share transfers and how the Chandrasekhar committee worked on the share transfer. 

Transfer of shares

Before we proceed to the committee, let us define a stock transfer. It simply refers to the transfer of shares of a company. Movement can take the form of physical movement, title ownership, or both. Transfer of stock is a type of voluntary exercise in which a shareholder buys and sells their shares through a contract. Under Rule 11 of the Companies, it is permissible under sub-rule one or Rule 11 of the Companies, sub-rule 3.

The procedure of transfer of shares

The transfer deed must be obtained as described by the authority in Form SH-4, in which you need to fulfill the AoA and MOA of a company. 

Now, you need to Obtain the articles of incorporation, trust deed in the case of debentures, and registrars of transfer deeds either by the transferor or by the transferee in the case of shares.

The transfer deed must be stamped following the Indian Sugar Act, and the council tax notifies an impact in the state in question. For share transfers, the current council tax rate is 25 paise for every one hundred of the share’s or part’s value. That means the income tax on Rs. 1,050 worth of shares will be Rs. 2.75.

Now, you need to Check that the imprint on the transmission deed is canceled at the time of or before the transfer deed is signed.

• A person who provides his name, signature, and address as approval for transfer must witness the transferor and transferee signing the share/debentures transfer deed in person.

• The transmission deed must be preceded by the relevant share/debenture credential or allocation letter, both of which must be supplied to the corporation.

• If the transferor requests paid shares, the corporate entity must notify the sublessee of the money owed to the shareholder. Furthermore, the receiver must submit a letter of no objection within two weeks of receiving the notice.

• If the sign transfer deed is missing, use the equivalent value stamp to stamp a written application. In this case, the panel may register the transmission based on indemnity terms deemed appropriate by it.

• If the corporation’s shares are decided to trade on a stock exchange, this could charge a fee for the enrollment of share and debt instrument transfers.

What is the Chandrasekhar committee? 

Now let’s understand what the Chandrasekhar committee is. The K.M. Chandrashekhar emerged to unify overseas investment norms for the first time. During 2000 when the country was growing faster, the need for foreign investors increased, SEBI established the Chandrasekhar Committee to oversee venture capital activities to promote technology and knowledge-based enterprises. To enhance the country’s venture capital industry’s growth and propose strategies for its rapid expansion. Turned in its report in January of 2000.

The objective of Chandrashekhar committees

The main objective of the Chandrasekhar committee is to increase foreign investment in the country. However, it also provides for the passage of transfer of shares. 

The committee describes the transfer process of shares as the share market was also increasing with industrialization. So, it plays an important role in the transfer of shares and stamp duty on the transfer of shares. 

The primary goal of the Chandrashekhar committee is to increase foreign investment in the country. However, it also allows for the transfer of shares.

As the share market expanded with industrialization, the committee described the process of transferring shares. As a result, it is crucial to transfer shares and the stamp duty on the transfer of shares.

Some of the major recommendations of the Chandrasekhar committee are discussed below: 

• One such suggestion is that a different type of investor will take the place of the FIIs, QFIs.

• The aggregate investment limit of FPIs is 24 per cent.

• Know your clients or kyc checks should be based on FPI risk categorization, with the simplest being in category one and the most stringent being in category 2. 

• First, foreign Central Banks, Multilateral Organizations, Sovereign Wealth Funds, and many other government-related services fall into the category. 

• Banks, Broad-Based Funds, Asset Management Companies, Reinsurance Companies, Investment Trusts, Insurance and University Funds such as Mutual Funds and Pension Funds are included in category 2. 

And some other recommendations of the Chandrasekhar committee is: 

harmonization of an assortment of regulations, VCF structures, resources, investments, exit, SEBI regulations, company law-related issues, and other issues. 

Conclusion

As the share market grew in 2000, so did the need for transfer of share procedures and foreign investments for the country’s development. And to address both of the country’s issues, the Sebi convened the Chandrasekhar Committee, which recommended changes to India’s foreign exchange policy. Also, as the stock market has risen, people have begun to sell and buy shares, and the procedure for transferring shares is being considered to exert control over them. As we learned in this article, the Chandrasekhar Committee is how it affects the process of share transfer, how to transfer a company’s share, stamp duty on transfer of shares and so on.